Natural Gas Price Fundamental Daily Forecast – Capped by Worries Over Potentially Bearish EIA Storage Report

Natural gas futures closed lower on Wednesday as traders just can’t shake the bearish tones being generated by the short-term weather forecasts. Sellers seem to be ignoring the robust LNG export activity and putting most of their focus on near-term demand weakness and the potentially bearish government storage report on Thursday.

Robust LNG Demand…

Natural Gas Intelligence (NGI) reported on Wednesday that LNG levels were strong throughout March, boosted by rising European demand in addition to continued Asian imports. A harsh winter in Europe depleted stockpiles, creating a need to bolster inventories with U.S. LNG ahead of the summer cooling season. LNG feed gas volumes eclipsed 11.7 Bcf on both Tuesday and Wednesday, near record levels, according to NGI data.

But Heating and Cooling Needs Minimized

But forecasters said that, as the weather heats up in April, customary spring maintenance projects would limit capacity at LNG facilities and eat into feed gas volumes. Rising temperatures also could push much of the Lower 48 into a multi-week period of comfortable weather conditions that minimize both heating and cooling needs, dampening demand for natural gas.

One Take On Thursday’s EIA Storage Report

Energy Aspects issued a preliminary estimate for a 14 Bcf injection for the week ended March 26. The firm estimated a nearly 20% week/week decline in heating degree days and a 5.7 Bcf/d drop in residential/commercial demand for the period. Power burns were down an estimated 1.0 Bcf/d week/week, with production up just 0.1 Bcf/d in that time, NGI reported.

“The steep fall in end-winter heating use is not quite offset by record LNG feed gas demand,” Energy Aspects said.

What’s more, April “will bring some shoulder-season looseness to feed gas demand in the form of increased maintenance on trains and upstream pipelines and compressors,” the firm added. “We forecast 9.7 Bcf/d of feed gas next month,” down notably from the highs of March. “The bulk of the decline comes from maintenance, which we anticipate will depress intake to liquefaction terminals by 1.4 Bcf/d below capacity.”

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