Natural Gas Price Fundamental Daily Forecast – Bearish Output Rise, LNG Demand Ahead of EIA Report

James Hyerczyk
Updated: Feb 9, 2023, 14:05 UTC

Today’s EIA report estimates range from -195 to -201 Bcf, but with the most notable survey at -201 Bcf, that’s likely where market expectations are.

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Natural gas futures are edging lower on Thursday as traders await the release of the latest government storage figures. Today’s early weakness follows a drop of about 7% on Wednesday to a fresh 25-month low “on a slow rise in output as warmer weather thaws frozen oil and gas wells,” according to Reuters.

A decline in liquefied natural gas (LNG) exports and forecasts for mostly mild weather to keep heating demand low through late February are also weighing on prices.

At 13:11 GMT, April natural gas futures are trading $2.459, down $0.018 or -0.73%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $8.22, down $0.65 or -7.33%.

Production Slowing Rising

Gas production hit a two-week high of 97.9 bcfd on Tuesday, up from a five-week low of 93.9 bcfd last week when extreme cold cut output by freezing oil and gas wells – known as freeze-offs – in several states, including Texas, New Mexico, Oklahoma and Pennsylvania.

Demand Expected to Drop

With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 125.0 bcfd this week to 119.8 bcfd next week.

Gas Flowing to LNG Export Plants Drops

The amount of gas flowing to U.S. LNG export plants dropped by about 1.2 billion bcfd over the last five days to a preliminary two-week low of 11.8 bcfd on Wednesday due mostly to a 1.1-bcfd reduction in feedgas to Cheniere Energy Inc’s 4.5 bcfd Sabine Pass export plant in Louisiana. Sabine is the nation’s biggest LNG export plant.

Short-Term Weather Forecast

According to NatGasWeather, “A chilly weather system will track across the central and eastern US the next several days with rain, snow, and chilly lows of 0s to 30s and highs of 20s to 50s for a minor bump in national demand.

However, a warmer US pattern will return next week as the eastern 2/3 of the US again warms above normal with highs of 50s to 80s for a return to very light national demand. The West will remain mild to cool as weather systems track through.

Overall, very low demand through Friday, then moderate Saturday, then back to low-very low after.”

US Energy Information Administration Weekly Storage Report

In today’s EIA storage report, due to be released at 15:30 GMT, withdrawal estimates range from -195 to -201 Bcf, but with the most notable survey at -201 Bcf, that’s likely where market expectations are.

A draw of -201 Bcf would be higher than the 5-year average of -171 Bcf.

As of Jan. 27, total working gas in storage stood at 2,583 Bcf, which is 222 Bcf above year-earlier levels and 163 Bcf above the five-year average, according to the EIA.

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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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