Natural Gas Price Fundamental Daily Forecast – Could Find Support on Renewed LNG Exports

Natural gas futures are closed in the U.S. on Monday but Friday’s price action gives us an idea of what traders will be looking at when the market reopens on Tuesday.

Prices rose on Friday, supported by expectations of an increase in LNG exports after they dropped the week before as Hurricane Laura shut facilities and export plants.

Front-month October natural gas futures rose 10.7 cents, or 4.31%, to settle at $2.588.

For the week, the front-month registered its first weekly decline in five and at a decline of 3.5%, its worst performance since the week ended July 17.

“There are some news that the LNG exports demand is about to start picking back up again in the next week or so, as some of the facilities are getting back electricity and ramping up, that’s very supportive for this market,” said Robert DiDona of Energy Ventures Analysis.

“The market was definitely looking for that demand, after having the big falloff in the exports towards the end of August before the storms hit,” he added.

Cheniere Energy, the country’s top LNG exporter, and Sempra LNG are expected to resume operations after no major damage was found following Hurricane Laura.

Laura knocked out power to thousands of homes and businesses in Louisiana, Texas and Arkansas after slamming into the Gulf Coast near the Texas-Louisiana border last week as a major Category 4 storm.

Short-Term Demand Outlook

Demand in the Lower 48 states is expected to decline slightly, falling from 83.9 billion cubic feet per day (bcfd) this week to 83.6 bcfd in the next, according to Refinitiv.

Refinitiv data indicated 137 cooling degree days (CDDs) in the Lower 48 over the next two weeks, decreasing from 148 CDDs the previous day, but still above the 30-year normal 126.

CDDs measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses.

Short-Term Outlook

Asian spot liquefied natural gas (LNG) prices rose last week as there were supply issues in Australia and the United States, while several buyers were looking for cargoes. This is the highest price since late January, Reuters price assessment data showed.

U.S. LNG exports could rise later this month as fewer cargoes were cancelled for September than for summer months. “Departures should begin to trend higher over the next 10 days or so,” data intelligence firm Kpler said in a note on Friday.

Although LNG export demand is expected to show signs of improvement following a months-long slump during fallout from the coronavirus pandemic, the recovery is expected to be gradual. This has analysts concerned that consumption may not accelerate quickly enough to support prices this fall.

The bottom line:  Keep an eye on U.S. LNG exports this weeks. A substantial increase could catch the bearish traders by surprise. It may only trigger a short-term price spike but it’s something to be aware of just in case the market starts to surge unexpectedly.

For a look at all of today’s economic events, check out our economic calendar.