Natural Gas News: Flat Movement as Traders Eye EIA Weekly Storage Report

Overview

The U.S. natural gas market is nearly flat on Thursday traders await the latest government storage report. Key factors influencing this trend include varying weather conditions and expected storage changes.

At 13:17 GMT, U.S. natural gas futures are trading $1.848, up $0.007 or +0.38%.

Weather and Storage Report Impact

The anticipated storage report, projecting a decrease of 38 to 43 billion cubic feet (Bcf), comes against a backdrop of cooler weather in most parts of the U.S., with exceptions in regions like the Ohio Valley, Northeast, and Florida. NatGasWeather forecasts from April 4-10 indicate a mix of high demand due to cooler temperatures in the Great Lakes and East, and lower demand elsewhere due to milder weather.

Recent Market Movements

Wednesday’s market activity showed a slight dip in U.S. natural gas futures by about 1%, influenced by a smaller-than-expected output decline and ample gas in storage. Despite an increase in demand and LNG exports, the May delivery futures closed at $1.841 per mmBtu. This price behavior is underpinned by a mild winter, resulting in higher-than-usual gas storage – about 39% above the norm.

Supply and Demand Considerations

The current landscape shows a projected increase in U.S. gas usage by 2024 but a decline in production, marking the first reduction since the 2020 pandemic. This is reflected in the 8% drop in output since the year’s start. Lower 48 states’ output has also decreased, with a future reduction in demand anticipated.

Short-Term Forecast

The near-term outlook for the natural gas market is tempered by expectations of moderate demand, influenced by upcoming mild weather conditions. While a brief rally might occur if the storage report deviates from expectations, the general outlook suggests a restrained market growth in the immediate future.

The U.S. natural gas market is currently characterized by ample storage and a period of generally lower demand. Short-term market fluctuations may occur due to weather-related demand changes, but the overall immediate trend points to a more restrained market.

Technical Analysis

Natural gas futures are offering a mixed trade ahead of today’s EIA report with traders wondering if this is consolidation before another short-covering rally or a resumption of the downtrend.

The market is currently caught in a range between resistance at $1.975 and support at $1.696. Its pivot at $1.835 is likely controlling the near-term direction of the market.