Natural Gas Price Forecast – Warmer Weather Drives Prices Higher

Natural gas prices moved higher on Monday as warmer than normal weather is now forecast to cover most of the east and west coast of the United States according to the latest forecast from the Nation Oceanic Atmospheric Administration. According to the NOAA forecats, the warmer weather will likely drive us cooling demand lifting prices. Natural gas rallied nearly 2%, with support seen near the 10-day moving average at 2.91.  Resistance is seen near the June highs at 2.99. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which reflects consolidation.

Supply falls slightly

According to data from the EIA, the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada decreased by 11% from last week as Rover began deliveries into the Vector pipeline, driving an increase in U.S. exports into Canada over the report week.

Demand ticks up

Total U.S. consumption of natural gas rose by 2% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 1% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 19%, driven by cool temperatures in New England late this report week. Natural gas exports to Mexico decreased 1%. The warmer than normal weather should help buoy prices as demand rises.

U.S. LNG exports increase week over week

Six LNG vessels combined LNG-carrying capacity 21.8 Bcf departed the United States from May 31 through June 6. Four tankers from Sabine Pass liquefaction terminal combined LNG-carrying capacity 14.9 Bcf and two tankers from Cove Point terminal combined LNG-carrying capacity 6.9 Bcf. One tanker LNG-carrying capacity 3.8 Bcf was loading at the Sabine Pass terminal on Wednesday.