Natural Gas Price Fundamental Daily Forecast – Erasing Weekly Gains Amid Bearish Weather Forecasts

Natural gas futures are edging lower on Tuesday after failing to follow-through to the upside following yesterday’s nearly 12% rise the previous session. The early price action suggests there may have been a slightly change to forecasts calling for colder weather and more demand.

Despite the early weakness, the market is expected to remain underpinned by increased demand for liquefied natural gas (LNG) after the return of Berkshire Hathaway Energy’s Cove Point LNG export plant in Maryland.

At 14:45 GMT, December natural gas futures are trading $5.868, down $0.487 or -7.66%. The United States Natural Gas Fund ETF (UNG) is at $19.22, down $1.16 or -5.69%.

Short-Term Weather Outlook

According to NatGasWeather for November 1-7, “Most of the U.S. will be warmer than normal and comfortable with highs of 60s to 80s besides the Northwest and Mountain West where highs will be in the 40s and 50s as Pacific weather systems sweep through with rain and snow.

A warmer than normal pattern will rule the eastern 2/3 of the U.S. on Friday-Monday with highs of 60s to 80s, while cool over the West.

Overall, very light national demand the next 7-days.”

Potential Rail Strike, Low Mississippi River Water Levels Could Drive Up Demand

After a primarily bearish summer and early fall, looming bullish factors are driving up support. They include the expected return of the Freeport LNG export plant in Texas that has been out of commission since June 8, the possibility of a railroad worker strike in mid-to-late November and concerns about falling Mississippi River water levels.

Freeport LNG said its still expects its 2.1 bcfd export plant in Texas to return to at least partial service in early-to-mid-November following an unexpected shutdown on June 8 caused by a pipeline explosion, Reuters said.

Meanwhile, the possible rail strike and the reduction in Mississippi water levels could threaten coal deliveries to U.S. utilities, forcing power generators to burn more gas, Reuters reported.

Last week, the Brotherhood of Railroad Signalmen union, representing more than 6,000 members, said workers voted against ratifying a national tentative agreement reached in mid-September, the second union not to approve the deal.

Finally, low levels on the Mississippi River are likely to persist this winter as drier-than-normal weather is expected across the southern United States and Gulf Coast, according to Reuters.

Daily Forecast

Prices are likely to remain under pressure throughout the session on Tuesday unless the mid-session forecasts put colder temperatures back into the forecast.

Ahead of Tuesday’s opening, both the American and European weather models had dropped forecast demand over the prior 12-24 hours, according to NatGasWeather.

Warmer trends overnight were focused on next Monday through Nov 11, with the data “showing cold air over Canada failing to advance as aggressively into the Midwest,” the firm said. “There will be frosty air over Canada Nov 8-15, but the weather data is struggling to determine just how much of it will arrive into the northern U.S.”

According to the early update, the overall pattern remains “solidly bearish” through the first 11 days of the month, before shifting toward “closer to seasonal” conditions Nov 12-15, according to NatGasWeather.