Natural Gas Price Fundamental Daily Forecast – Supported by Strong European Demand for US LNG

Natural gas futures are trading higher on Tuesday, recovering most of yesterday’s steep loss, as soaring global gas prices keep demand for U.S. liquefied natural gas (LNG) exports near record highs.

Gas prices in Europe soared about 6% on Tuesday as colder weather increased demand and the market remained nervous about winter supplies from Russia, Reuters reported. Analysts have said European inventories were about 17% below normal for this time of year, compared with just 2% below normal in the United States.

At 13:19 GMT, January natural gas futures are trading $5.040, up $0.179 or +3.68%.

Refinitiv Supply/Demand Outlook

Data provider Refinitiv said output in the U.S. Lower 48 states averaged 96.1 billion cubic feet per day

(Bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019.

Refinitiv projected average U.S. gas demand, including exports, would rise from 111.2 bcfd this week to

112.6 bcfd next week as the weather turns seasonally colder and homes and businesses crank up their heaters. The forecast for next week, however, was lower than Refinitiv’s forecast on Monday.

Steady Global Demand for US LNG

The amount of gas flowing to U.S. LNG export plants has averaged 11.2 bcfd so far in November, up from 10.5 bcfd in October as the sixth train at Cheniere Energy Inc’s Sabine Pass plant in Louisiana started producing LNG in test mode. That compares with a monthly record of 11.5 bcfd in April, Reuters reported.

With gas prices around $29 per mmBtu in Europe and $34 in Asia, compared with about$5 in the United States, traders said buyers around the world will keep purchasing all the LNG the United States can produce.

NatGasWeather Short-Term Forecast

According to NatGasWeather for November 23 – November 29, “A chilly weather system with rain and snow will track across the Great Lakes and East Tuesday with highs of 30s to 40s and lows of 10s to 30s.

Most of the rest of the U.S. will be mild to nice with highs of 50s to 70s. A mild break is expected across the East mid-week with highs of 40-60s for a swing back to lighter demand. However, a fresh cold shot will drop into the Midwest and track across the East Friday-Saturday with lows of 10s to 30s for a swing back to stronger national demand.

Overall, national demand will swing between moderate and high every few days over the next week.

Daily Forecast

The direction of the January natural gas futures contract is likely to be determined by trader reaction to $5.024.

Bullish Outlook

A sustained move over $5.024 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a potential surge into $5.338, followed by a main top at $5.480.  Taking out $5.480 will change the main trend to up and could trigger an acceleration to the upside.

Bearish Outlook

A sustained move under $5.024 will signal the presence of sellers. This could trigger a break into yesterday’s low at $4.736. This is a potential trigger point for an acceleration to the downside.