Increased Export Demand Fuels Short-Covering Rally as Natural Gas Prices Surge

James Hyerczyk
Updated: Mar 31, 2023, 20:50 UTC

Natural gas futures may experience a short-covering rally due to increased export demand.

Natural Gas

In this article:


  • Natural gas futures trading higher on export demand
  • Futures expected to experience 51% decrease this quarter
  • Two major LNG export plants back online or nearing completion


Natural gas futures are trading sharply higher at the mid-session, putting the market in a position to post a potentially daily closing price reversal bottom. If confirmed on Monday, then look for the start of a 2-3 day counter-trend rally.

Although the outside move, higher close chart pattern is dramatic, it does not represent a change in trend, but merely a powerful short-covering rally, likely triggered by the disappearance of offers to sell.

At 16:00 GMT, May natural gas futures are trading $2.194, up 0.090 or +4.28%. The United States Natural Gas Fund ETF (UNG) is at $6.95, up $0.27 or +3.97%.

Daily May Natural Gasv

US Natural Gas Futures Reach One-Week

US natural gas futures rose to a one-week high last Friday due to forecasts of increased demand as gas flowed to liquefied natural gas export plants.

However, the futures are still predicted to experience a historic 51% decrease this quarter.

The market has been volatile, with front-month prices fluctuating by over 5% on 10 of the past 22 trading days.

Freeport LNG’s Texas facility has regained near-full power following an eight-month shutdown caused by a fire in June 2022, while Venture Global LNG is completing its Calcasieu Pass export plant in Louisiana.

Refinitiv reported that US gas production in the Lower 48 states increased to an average of 98.6 billion cubic feet per day in March, up from 98.1 in February.

Gas stockpiles were around 21% higher than the five-year average for the week ending March 24th. The stockpiles are expected to end about 20% above normal for the week ending March 31st.

Weather conditions in the Lower 48 states are expected to remain relatively normal until April 13th, leading Refinitiv to forecast that US gas demand, including exports, will decrease from 110.6 billion cubic feet per day this week to 104.1 billion in the following week and 103.8 billion in two weeks.

Short-Term Outlook

Based on today’s price action and increased LNG export plant demand, we can build a case for a short-covering rally early next week. However, it is going to take time to build a support base that eventually leads to a change in trend.

The market is currently trading sharply higher and may potentially post a daily closing price reversal bottom, which could lead to a 2-3 day counter-trend rally if confirmed on Monday.

Additionally, there are forecasts of increased demand due to gas flowing to liquefied natural gas export plants, and two major LNG export plants are either back online or nearing completion.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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