Natural Gas Price Fundamental Daily Forecast – Producers, Refiners Facing Delays in Restart of Facilities

Natural gas futures edged higher on Friday as significant amounts of production remained offline in the aftermath of Hurricane Ida, aggravating an already tense supply situation.

At 18:42 GMT, October natural gas futures are trading $4.699, up $0.058 or +1.25%.

According to reports, U.S. Gulf Coast energy companies have advanced efforts to restart facilities, but larger hurdles remain for producers and refiners. The unexpected delays in the restart are raising concerns over adequate storage going into winter.

The current price action suggests that $5.00 natural gas is not out of the question especially since there is still about two months left in hurricane season.

US Energy Information Administration Weekly Storage Report

Natural gas futures were also underpinned by Thursday’s U.S. Energy Information Administration (EIA) report that showed domestic supplies of natural gas rose by 20 billion cubic feet (Bcf) for the week-ended August 27. That number matched the average increase forecast by analysts polled by S&P Global Platts.

Total stocks now stand at 2.871 trillion cubic feet (Tcf), down 579 Bcf from a year ago and 222 Bcf below the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for September 3 to September 9, “It will be comfortable across the northern 2/3rds of the U.S. through the weekend as week cool fronts keep highs into the comfortable 70s to 80s.

California to Texas and the Southern Plains remain very warm to hot with highs of mid-80s to 100s. The western, central, and southern U.S. will be very warm to hot this weekend as high pressure dominates with highs of 80s and 90s.

The Midwest and Northeast will cool next week into the 60s and 70s as stronger fall-like cool fronts sweep through with scattered showers.

Overall, national demand will be low across the northern U.S. but moderate to high across the western and southern U.S.

Short-Term Outlook

We’re looking for the volatility to continue over the near-term especially next Tuesday when the market opens up following the long U.S. Labor Day weekend.

Although the weather is expected to show a seasonal pattern over the next 15 days, Thursday’s EIA report served as a reminder that the market is still facing a tight supply and demand balance. Some are saying the deficit may increase from -240 Bcf to 222 Bcf after next week’s EIA report.

The biggest fear is that the supply deficit will continue to increase unless stronger U.S. production occurs to help loosen the balance since it won’t come from a drop in LNG exports since they are expected to remain strong through winter due to tight supplies in Europe and Asia.