Natural Gas Price Fundamental Daily Forecast – Weak Until LNG Demand Returns

Natural gas futures are trading lower at the mid-session on Tuesday after an early rally failed to generate enough buying interest to sustain the move. The main concern for bullish traders is how quickly liquefied natural gas (LNG) demand will recover following the damage from Hurricane Laura. After showing early session strength, prices retreated amid signs of continued impacts to LNG demand from the hurricane.

At 15:53 GMT, October natural gas is trading $2.530, down $0.100 or -3.30%.

Natural Gas Intelligence reported that analysts at EBW Analytics Group said the market initially “badly misjudged” the storm’s impact.

“In an impressive show of strength…after support for October held just below $2.50, a better-informed assessment prevailed,” the EBW analysts said. “Futures rallied strongly, with October recovering all but 2.7 cents of its losses and the rest of the forward curve posting gains.”

Meanwhile, there are still concerns over how long it will take the Sabine Pass and Cameron LNG terminals to ramp back up, and the October contract could still face downward price pressure in the interim, according to EBW.

However, “once the terminals are back online, LNG feed gas flows could jump by as much as 4-5 Bcf/d from Monday’s 2.88 Bcf/d level,” the EBW analysts said. “This could push the forward curve higher and reduce the October/December spread.”

Short-Term Weather Outlook

According to NatGasWeather for September 1 to September 7, “Demand will again be light today as weather systems with showers sweep across the northern and central U.S. with highs of upper 60s to 80s. The southern and western US remain very warm to hot as high pressure rules with highs of mid-80s to 100s, hottest in 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 90’s as high pressure builds in for a modest bump in national demand.”

Short-Term Outlook

The weather forecast remains choppy with no major changes overall in national demand. NatGasWeather said the temperature outlook points to a few early season heating degree days next week, but this is “not expected to translate to much heating demand.”

NatGasWeather further added that beyond next week, the pattern “remains rather bearish” from a lack of either cold or heat relative to seasonal norms for mid-September, the forecaster said.

Traders aren’t focusing too much on weather demand at this time anyway. The next major move in the market is likely to be fueled by renewed demand for LNG.

For a look at all of today’s economic events, check out our economic calendar.