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Natural Gas News: Analysts Predict Significant Inventory Build in EIA Report

By:
James Hyerczyk
Published: Apr 25, 2024, 12:18 GMT+00:00

Key Points:

  • Weather and energy shifts shape natural gas demand,
  • Anticipated storage increase far above five-year average.
  • Bearish short-term outlook with potential seasonal recovery.
Natural Gas News

In this article:

US Natural Gas Market Update

US natural gas futures remained steady early Thursday, following a significant decline in the previous session. This stability comes as the market anticipates the release of the U.S. Energy Information Administration’s (EIA) weekly storage report, expected to reveal a substantial increase in natural gas inventories.

At 12:08 GMT, Natural Gas Futures are trading $1.656, up $0.003 or +0.18%.

Key Market Factors

Wednesday’s trading session ended with natural gas prices falling approximately 5%, driven by the dual pressures of an anticipated decrease in heating demand and the looming expiration of the May contract. Operational setbacks at the Freeport LNG terminal compounded the market’s struggles, although recent increases in gas flow to the facility suggest a slow recovery might be underway.

Analysts are predicting a notable increase in natural gas storage, with projections ranging from 79 to 89 billion cubic feet (Bcf), significantly above the five-year average of 59 Bcf. This anticipated rise is a result of subdued demand coupled with robust alternative energy outputs. Additionally, a downturn in drilling activities has led to a roughly 10% decrease in U.S. natural gas production this year, with major producers like EQT and Chesapeake Energy postponing new developments in response to persistent low prices.

Weather Impact and Demand Forecast

According to NatGasWeather, the period from April 25 to May 1 will see moderate to high natural gas demand, expected to drop sharply afterwards. Comfortable weather across most of the US is predicted to lessen heating requirements, though cooler conditions in the Great Lakes and Northeast may temporarily boost demand.

Market Forecast

The near-term outlook for the natural gas market remains bearish, influenced by elevated storage levels and diminished demand. However, upcoming warmer months could slightly tighten the market as cooling needs rise, potentially providing some support to prices. The impending EIA storage report will be crucial in shaping market sentiment, with traders eyeing any indications of price stabilization as the May contract approaches its conclusion.

Daily Natural Gas

The main trend is down according to the daily swing chart. A trade through $1.848 will change the trend to up.

The intermediate trend is also down. It is being controlled by the 50-day moving average at $1.864. A trade through this level will change the trend to up.

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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