Natural Gas Price Fundamental Daily Forecast – Big Upside Move Likely Once Freeport Uncertainty is Lifted

Natural gas futures finished sharply lower on Friday in a volatile session. The market was primarily supported early as the market balanced forecasts for the weather to remain colder than normal through late November but less cold next week than previously expected.

However, the market was hit hard late in the session after number of corporate impersonators on Twitter drove prices sharply lower after Tweets circulated claiming that a Texas gas-export terminal, shutdown since a June fire, would be further delayed, the Wall Street Journal reported.

The fake tweets were denied later in the day by Freeport officials, but the damage had already been done.

“Freeport LNG has not made any public statements today regarding the restart of our liquefaction facility,” the company said in a statement after markets closed.

On Friday, January natural gas futures settled at $6.263, down $0.350 or -5.29%. The United States Natural Gas Fund ETF (UNG) closed at $19.17, down $0.71 or -3.57%.

Traders Hypersensitive to Freeport News

Natural gas prices have fallen steadily since a June 8 explosion at the Freeport LNG facility stopped 1.2 billion-cubic-feet-per day (bcfd) of gas from being processed into LNG. The gas that was supposed to go to the facility was instead sent into storage, which helped close the supply deficit.

For weeks, however, the market has been agitated by reports that Freeport would return to at least partial service in November. However, sources familiar with Freeport LNG’s filings with the federal safety regulators told Reuters late Thursday that Freeport LNG has not yet submitted a request to resume service to the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA).

Analysts at Goldman Sachs, an investment bank, Gelber & Associates, an energy consulting firm and others have said that lack of a request to resume service likely means the plan will not return until December.

Big Boost to Demand Possible if Freeport LNG Reopens

A surprise announcement to reopen by Freeport LNG would give prices a tremendous boost especially as the U.S. heads into the winter heating season. The response by the market will be almost immediate due to reports that vessels are already lining up to pick up LNG supply.

Refinitiv Data is reporting that a couple of vessels were already waiting to pick up LNG from Freeport. Prism Diversity and Prism Courage were offshore from the plant, while LNG Rosenrot and Prism to arrive in late November.

But one vessel, Prism Brilliance, which had been waiting outside the Freeport plant, is now waiting outside Corpus Christi in Texas where Cheniere Energy Inc has an LNG export plant, according to Refinitiv data.

Short-Term Outlook

We’re looking for a rangebound trade over the near-term as storage bins continue to fill, closing the supply deficit to the five-year average. However, as the cold weather progresses throughout the country, we’re expecting a strong upside bias to develop.

The wildcard is the reopening of Freeport LNG. Gas prices may start to rally on the news that the company filed the necessary government paperwork to reopen. Prices could soar once the company announces the date of the official reopening.