Natural Gas News: Cold Weather Surge to Give Way to Warmer Temps Soon

James Hyerczyk
Published: Apr 3, 2024, 13:18 UTC

Key Points:

  • Cold weather boosts natural gas demand, but warm forecast could reverse trend.
  • Recent price hike due to production cuts, set against high storage levels.
  • US tops global LNG exports, influenced by European shift from Russian gas.
Natural Gas News

In this article:

US Natural Gas: Bracing for a Bearish Shift after Bullish Surge

US Natural Gas futures are on the rise, with a bullish trend driven by current cold weather patterns. However, expectations of a bearish turn are looming due to forecasted warmer conditions in the coming days.

At 14:03 GMT, Natural Gas futures are trading $1.875, up $0.013 or +0.70%.

Weather’s Dual Impact

Currently, a cold spell across the Great Lakes and Eastern US is driving up demand, pushing prices higher. This bullish trend, influenced by lower temperatures and snow, is set to continue for the near term. Yet, the market is bracing for a downturn. Predictions of milder weather in the April 8-15 window suggest a significant drop in demand, potentially leading to a bearish shift.

Recent Price Movements

US natural gas futures have edged up, marking a fresh three-week high. This trend results from reduced production as prices had fallen to multi-year lows in February and March, influenced by a mild winter and high storage levels. Key players like EQT and Chesapeake Energy have curtailed production, responding to the glut.

Supply Constraints and LNG Exports

April’s production in the Lower 48 states is down, mirrored by decreased LNG exports due to repairs at major facilities like Freeport LNG. These supply constraints, alongside reduced demand expectations as warmer weather sets in, are critical factors to watch.

US’s Dominance in Global LNG

2023 saw the US become the leading LNG exporter globally, overtaking giants like Qatar and Australia. This rise in exports, mainly to Europe seeking alternatives to Russian gas, highlights the US’s strategic position in the energy sector.

Short-Term Forecast

In the immediate term, natural gas prices are expected to maintain their bullish momentum, buoyed by the current demand spike. However, traders should prepare for a possible downturn as the weather warms up, diminishing demand. This period ahead calls for a strict focus on the evolving weather patterns and their subsequent impact on both domestic demand and global market trends.

Technical Analysis

Daily Natural Gas

U.S. natural gas is edging higher for a fourth straight session on Wednesday. If the upside momentum continues then look for a surge into the 50-day moving average at $2.604. Since the major trend is down, sellers are likely to re-emerge on a test of this intermediate trend indicator.

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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