Natural Gas Price Fundamental Daily Forecast – Demand Destruction Offsetting Production LossesAccording Natural Gas Intelligence (NGI), spot gas prices softened due to lower liquefied natural gas (LNG) demand from Gulf Coast facilities.
Natural gas futures are trading lower late in the session on Wednesday. Even though Hurricane Laura has been upgraded to Category 4, traders seem unfazed about any potential damage to infrastructure, but are genuinely concerned about lower demand.
According to Natural Gas Intelligence (NGI), spot gas prices also softened due to increasing cloud cover along the Gulf Coast, as well as lower liquefied natural gas (LNG) demand from Gulf Coast facilities. NGI’s Spot Gas National Average fell 5.0 cents to $2.310.
Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
At 18:00 GMT, October natural gas futures are trading $2.580, down $0.016 or -0.62%.
Weather and Lower LNG Demand
“LNG cargoes in and out of the Gulf have already ceased and will likely lead to a drop of LNG feed gas from 5.1 Bcf Monday to 3-4 Bcf in the day ahead,” said NatGasWeather.
“Essentially, while production losses will be near to slightly greater than 2 Bcf/d, LNG feed gas and demand destruction from clouds, rain, cooling and power outages are likely to offset, NatGasWeather wrote.
NGI added that Mobius Risk Group pointed out that considering the September contract expires on Thursday, and market expectations call for a sizable increase in LNG feed gas demand in September, such disruptions to supply and demand “may cause confusion regarding the fair value for methane molecules” next month. Adding to this challenge are large swings in downstream markets in Europe and Asia, the firm said.
Thursday’s September futures contract expiration could cause whip saw price action due to the hurricane and the release of the U.S. Energy Information Administration (EIA) weekly storage report.
Once Hurricane Laura passes, the weather will jump to the front and center with cooler outlooks not boding well for bullish traders. In fact, when combined with the loss of demand from the storm, prices could even drop sharply.
NatGasWeather sees, “The Southern United States and up the East Coast still very warm, but national demand won’t be as strong with the northern and central U.S. mostly comfortable.”