Natural Gas Price Fundamental Daily Forecast – Strong LNG Export Demand Not Enough to Offset Bearish Weather

Natural Gas futures are trading nearly flat on Wednesday shortly after the regular session opening. Despite reports of strong liquefied natural gas exports, the market can’t seem to shake the bearish effects from the latest weather forecasts.

At 12:15 GMT, May natural gas futures are trading $2.555, up $0.001 or +0.04%.

LNG Supported by Strengthening European Demand

Natural Gas Intelligence (NGI) is reporting that LNG feed gas volumes hovered close to 12 Bcf/d late last week – around record levels – and have held comfortably above 11 Bcf this week, thanks in part to strengthening European demand for U.S. exports.

The strength is linked to “declines in European storage, suggesting that U.S. injection-season LNG exports are likely to be strong – tightening the market later this year,” EBW Analytics Group said.

The LNG demand also reflects confidence in coronavirus vaccination programs and that “economic shut-ins are increasingly unlikely,” the EBW team said. Still, “LNG demand may remain subject to temporary reductions due to maintenance or tropical storms.”

Short-Term Weather Outlook

According to NatGasWeather for March 24-30, “A messy pattern the next few days as numerous weather systems bring showers and thunderstorms, including snow to the Rockies. However, these systems are rather mild with highs of 40s to 60s. The southern U.S. will remain comfortable with highs of 60s to 80s, while the Ohio Valley and Northeast will be warmer than normal with highs of 50s and 60s to aid light national demand. It won’t be until next week when weather systems over the west-central U.S. track across the Midwest and Northeast with highs of 40s to 60s for a modest bump in national demand.”

Energy Information Administration Weekly Storage Report

The EIA reported on March 18 that domestic supplies of natural gas declined by 11 billion cubic feet for the week-ended March 12. On average, the report was expected to show a decline of 17 billion cubic feet for the period, according to analysts polled by S&P Global Platts.

Total stocks now stand at 1.782 trillion cubic feet, down 253 billion cubic feet from a year ago and 93 billion cubic feet below the five-year average, the government said.

Natural Gas Intelligence (NGI) wrote on Tuesday, “Looking ahead to Thursday’s storage report from the U.S. Energy Information (EIA), NGI is modeling a 17 Bcf withdrawal for the week ended March 19. That would compare with a 26 Bcf withdrawal recorded in the year-ago period and a five-year average 51 Bcf pull.

Energy Aspects issued a preliminary estimate for a 10 Bcf withdrawal for the upcoming report. The firm modeled no change week/week in heating degree days, while LNG feed gas demand increased an estimated 0.6 Bcf/d for the week “as Corpus Christi ramped up to 2.4 Bcf/d midweek, or over 95% utilization at all three of its trains.”

Short-Term Outlook

The main range is $2.352 to $3.060. The market is currently trading on the weak side of its retracement zone at $2.622 to $2.706.

The market needs to overcome $2.622 in order to shift momentum to the upside.

It’s going to be hard to change momentum to the upside unless the weather forecasts change. Meanwhile, both the European and domestic weather models on Tuesday showed “emphatically bearish” conditions in terms of domestic natural gas demand for the remainder of March and into April, NatGasWeather said.