Natural Gas News: Struggling to Find Buyers Even at Historic Lows

Flat Start after Monday’s Sell-off

U.S. natural gas futures remained flat on Tuesday, with prices struggling to find momentum after a steep drop on Monday. The market is contending with substantial inventories and muted demand, despite lower projected production for 2024. Short-term forecasts are bearish, with the market sentiment generally favoring “sell the rally” approaches.

At 12:05 GMT, Natural Gas Futures are trading $1.698, up $0.007 or +0.41%.

Market Influences

Monday saw U.S. natural gas futures fall by 2% to a more than two-week low, influenced by a reduced demand forecast. This dip is largely attributed to decreased feedgas deliveries to Texas’s Freeport LNG export plant, impacting overall market activity. The gas flows to major U.S. LNG export plants have notably decreased from March to April, with a significant drop at the Freeport plant from an average of 0.4 billion cubic feet per day (bcfd) to 0.1 bcfd on Monday.

Production and Storage

Natural gas output in the Lower 48 U.S. states has shown a decline from 100.8 bcfd in March to 97.6 bcfd in April. This decrease accompanies an unexpected increase in gas storage levels, as reported by the U.S. Energy Information Administration (EIA). Last week, utilities injected 24 billion cubic feet of gas into storage, surpassing most industry forecasts.

Weather Impact

Short-term weather forecasts indicate varying temperatures across the U.S., which could influence demand patterns. NatGasWeather highlights a brief period of increased demand due to colder conditions expected from Friday to Monday across the northern, central, and eastern U.S. However, the forecast suggests a return to warmer than average temperatures toward the end of April.

Short-term Forecast

The outlook for U.S. natural gas futures remains bearish due to high inventories, subdued demand, and the volatile influence of changing weather patterns. With the market prone to occasional price spikes in response to temporary oversold conditions or abrupt shifts in weather, traders should remain cautious. The current conditions suggest that maintaining short positions or implementing protective strategies could be prudent to manage potential market volatility effectively.

Technical Analysis