Natural Gas Price Fundamental Daily Forecast – Mixed to Lower as Focus Shifts to LNG Demand, Cooler Forecast

Natural gas prices are edging lower shortly before the regular session opening on Monday as U.S. energy companies continue to restaff offshore oil and gas production facilities in the U.S. Gulf of Mexico, according to data released by the U.S. Department of interior over the week-end.

At 10:29 GMT, October natural gas futures are trading $2.639, down $0.018 or -0.68%.

According to the data, natural gas production fell 59%, or 1.6 billion cubic feet per day as companies braced for the arrival of Hurricane Laura. There were 189 platforms or drilling rigs in the U.S. Gulf of Mexico that remained unmanned on Saturday, the department said, down from 310 unoccupied facilities on Wednesday.

U.S. Gulf of Mexico offshore wells account for 17% of total U.S. crude oil production and 5% of total U.S. natural gas production.

Traders Keeping an Eye on LNG Demand

According to Natural Gas Intelligence (NGI), the former Category 4 storm also brought liquefied natural gas (LNG) demand to a halt. Both the Sabine Pass and Cameron export terminals shut down operations before Hurricane Laura washed ashore.

NGI data also showed feed gas deliveries at around 2.8 Bcf/d for Friday, which up from the 2.3 Bcf/d low is recorded on Wednesday, but sharply off the 5.0 Bcf/d highs seen the previous week.

Short-Term Weather Outlook

According to NatGasWeather for August 31 to September 6, “Demand will be light the next few days as weather systems with showers sweep across the northern and central U.S. with highs of upper 60s to 80s. The southern and western U.S. remain very warm to hot as high pressure rules with highs of mid-80s to 100s, hottest California and the Southwest. Showers will cool Northern Texas and portions of the South into the 80s mid-week, then warming back into the 90s late in the week. The East will also warm late in the week with highs of mid-80s to low 90s as high pressure builds in for a modest bump in national demand.”

U.S. Energy Information Administration Weekly Storage Report

U.S. natural gas stocks increased by 45 Bcf the week-ending August 21.

U.S. natural gas inventories increased to 3,420 Bcf for the week-ended August 21. Storage volumes stood at 580 Bcf, or 20.4%, more than the year-ago level of 2.840 Bcf; and 438 Bcf, or 15%, more than the five-year average of 2.982 Bcf.

Short-Term Outlook

Technical factors could also be playing a role in the early price action on Monday. After surging to a multi-month high on Friday, October natural gas futures settled lower, producing a potentially bearish closing price reversal top in the process. If confirmed by a trade through $2.621, the market could begin a minimum two to three day correction.

The session begins on Monday with the trend up. The trend will change to down on a move through $2.424. This could trigger an even steeper sell-off over the near-term.

Fundamentally, the cooler weather forecast has the attention of traders today as they continue to monitor the progress toward getting production facilities up and running again.