Natural Gas News: Traders Expecting 76 Bcf Build in Today’s EIA Storage Report

James Hyerczyk
Published: May 16, 2024, 12:29 GMT+00:00

Key Points:

  • Anticipation of the storage report drives natural gas futures higher.
  • Oversupply challenges offset by rising LNG export flows.
  • Political push for faster U.S. LNG project approvals.
Natural Gas News

In this article:

Natural Gas Futures Rise Ahead of Storage Report

Natural gas futures are climbing on Thursday, driven by anticipation of the government’s weekly storage report due at 14:30 GMT. Traders expect a build of 76 Bcf, potentially causing market volatility. This week has seen strong performance in natural gas, supported by upward revisions in demand projections.

At 12:17 GMT, Natural Gas futures are trading $2.428, up $0.012 or +0.50%.

Oversupply and Demand Adjustments

Significant oversupply remains a challenge, with storage levels approximately 31% above seasonal norms. Despite this, the restoration of the Freeport LNG plant and increased flows to major U.S. LNG export facilities, averaging 12.7 Bcfd in May, are providing price support.

Shift in Trader Sentiment

Traders have shifted their positions from net short to net long, reflecting growing bullish sentiment. This shift is influenced by increased LNG export capacity and marginal rises in demand forecasts. Major producers like EQT and Chesapeake Energy have strategically reduced drilling activities in response to earlier price declines, supporting this bullish outlook.

China’s Record LNG Imports

China’s LNG imports are projected to reach record levels in 2024, driven by industrial and commercial sector demand. PetroChina forecasts imports between 78-80 million metric tons, up 9-12% from 2023. This demand surge could further impact global LNG markets, influencing natural gas prices.

U.S. Political Pressure on LNG Projects

U.S. political dynamics are also in play, with Republican lawmakers urging swift approval of LNG projects by the Federal Energy Regulatory Commission (FERC). Delays could force allies to turn to other suppliers like Qatar and Iran. The U.S. became the world’s largest LNG exporter last year, and timely approvals are crucial to maintaining this status.

Market Forecast

Despite the current oversupply, the upward revision in demand projections and increased LNG export capacity are likely to sustain the bullish trend in natural gas futures. However, ongoing maintenance impacting export demand and high storage levels may temper significant price increases. Traders should watch for the storage report and FERC’s decisions on LNG project approvals for further market direction.

Technical Analysis

Daily Natural Gas

Natural gas futures are grinding higher on Thursday with traders’ sights set on a near-term test of the 200-day moving average at $2.772.  Despite this bullish outlook, traders are treading cautiously since the downside risk is the 50-day moving average at $2.170.

Heightened volatility is the theme today because a bullish miss in the EIA report could punish short-sellers with a spike to the upside, while a bearish miss could fuel an acceleration to the downside.

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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