Natural Gas News: Futures Rise Amid Cold Weather Projections

Uptrend in Natural Gas Markets Amid Cold Weather Forecasts

Natural gas futures are climbing for the second consecutive session, with indicators suggesting a weekly gain as traders respond to a combination of oversold conditions, forecasted colder weather, and potential dips in production.

At 14:32 GMT, Natural Gas Futures are trading $1.795, up $0.038 or +2.16%.

Market Analysis

The Energy Information Administration (EIA) reported a net increase in natural gas storage, totaling 2,333 billion cubic feet (Bcf) as of April 12, 2024, marking a substantial rise from the previous year. Despite this surplus, prices are gaining traction due to the late-season cold spells expected to increase heating demand across significant parts of the U.S. Furthermore, technical signals indicating oversold conditions have also provided a bullish nudge to the market dynamics.

Demand and Supply Outlook

As colder temperatures are anticipated to persist into next week, with snow and chilly conditions forecasted across the northern, central, and eastern U.S., natural gas demand is set to escalate. Additionally, the EIA’s recent Short-Term Energy Outlook highlights growth in U.S. natural gas trade, propelled by new LNG export facilities ramping up operations. Notable increases in exports are expected, particularly through pipelines to Mexico, enhancing market optimism.

Storage and Export Capacity

Current storage levels are significantly higher than the five-year average, but the steady growth in LNG export capacity and stable pipeline exports to Mexico suggest a tightening in the U.S. gas balance moving forward. This scenario is buttressed by upcoming LNG projects like Plaquemines LNG Phase I and Corpus Christi Stage 3, poised to start production by the end of 2024.

Short-Term Market Forecast

Given the robust export outlook, coupled with forecasted increases in domestic demand due to cooler weather, natural gas markets are expected to exhibit bullish behavior in the short term. Traders should monitor weather patterns and LNG export dynamics closely, as these factors will be pivotal in driving price movements in the upcoming weeks.

Technical Analysis

Upside momentum appears to be building as the market attempts to pullaway from the recent bottom at $1.649. The price action suggests short-covering could trigger a near-term rally into the downtrending 50-day moving average at $1.892. Trader reaction to this intermediate trend indicator is likely to set the tone over the next several days.