Natural Gas Price Fundamental Daily Forecast – Bounces from Four-Month Low on Soaring European Futures Prices

Natural gas futures are edging higher late in the session on Tuesday after testing a four-month low the previous session. The market was supported by a 7% gain in European gas futures that was expected to keep U.S. liquefied natural gas exports at record highs.

The rally came despite forecasts for milder U.S. weather and lower heating demand over the next two weeks than previously expected, suggesting it was being fueled by short-covering.

At 21:00 GMT, January natural gas futures are trading $3.731, up $0.074 or +2.02%.

European Futures in Spotlight

In recent months, global gas prices hit record highs as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China, Reuters reported.

Following those global gas prices, U.S. futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter. Overseas prices were currently trading about eight times higher than U.S. futures.

Analysts have said European inventories were about 17% below normal for this time of year, compared with just 2% below normal in the United States.

Refinitiv:  Lower Weekly Demand, Lower Weekly Output

Data provider Refinitiv said output in the U.S. Lower 48 states averaged 96.3 billion cubic feet per day(bcfd) so far in December, down from a monthly record of 96.5 bcfd in November.

With an unusual warming of the weather in December, Refinitiv projected average U.S. gas demand, including exports, would slide from 113.8 bcfd this week to 111.0 bcfd next week. Those forecasts were lower than Refinitiv’s outlook on Monday.

Refinitiv:  Strong Asian, European Demand for ‘Cheap’ US LNG

The amount of gas flowing to U.S. LNG export plants averaged 11.82 bcfd so far in December now that the sixth train at Cheniere Energy Inc’s Sabine Pass plant in Louisiana was producing LNG. That compares11.39 bcfd in November and a monthly record of 11.48 bcfd in April, Refinitiv reported.

With gas prices around $31 per mmBtu in Europe and $34 in Asia, compared with about $4 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States can produce.

But no matter how high global gas prices rise, the United States only has the capacity to turn about 11.1bcfd of gas into LNG. The rest of the gas flowing to the export plants is used to fuel equipment that produces the LNG.

Global markets will have to wait until later this year to get more when Venture Global LNG’s CalcasieuPass in Louisiana starts producing LNG in test mode.