Natural Gas Prices Forecast: Exports Soar to Record High According to EIA Data

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Published: Oct 4, 2023, 13:00 GMT+00:00

U.S. Natural Gas Futures indicate mixed sentiments as exports soar to record highs, but domestic demand and weather conditions elicit caution.

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Natural Gas

+3.47%

Highlights

U.S. natural gas exports hit an unprecedented high in 1H23, led by a surge in LNG shipments.
Despite bullish export numbers, light national demand raises questions on the market’s resilience.
LNG exports solidify the U.S. as the global leader, averaging 11.6 Bcf/d in the first half of 2023.

U.S. Natural Gas Exports Hit Record, But Demand Lags

U.S. natural gas exports have soared to a record high in the first half of 2023, driven mainly by liquefied natural gas (LNG) exports. According to the Energy Information Administration (EIA), the U.S. exported an average of 20.4 billion cubic feet per day (Bcf/d), a 4% increase compared to the same period in 2022. However, light national demand predictions could stymie these gains.

Export Dynamics

LNG exports served as the linchpin for the overall export growth, although pipeline exports also saw an uptick. LNG exports averaged 11.6 Bcf/d, solidifying the United States as the world’s leading LNG exporter. Meanwhile, pipeline exports to Canada and Mexico averaged 8.8 Bcf/d, with Mexico alone accounting for about 66% of total U.S. pipeline exports from January through June.

Demand in Mexico

Mexico ramped up its natural gas imports from the U.S. to meet growing demand in its electric power sector. The growth has been steady since 2019 due to the development of connecting pipelines in Central and Southwest Mexico.

Imports and Domestic Demand

While export numbers are robust, the U.S. still relies on natural gas imports, primarily by pipeline from Canada, which decreased by 5% to 7.9 Bcf/d in the first half of 2023. Seasonal demand fluctuations and a mild winter contributed to this decline.

Short-Term Forecast: Mixed

The immediate outlook for the U.S. natural gas market appears mixed. On one hand, record-high exports present a bullish sentiment, but on the other hand, subdued domestic demand and mild weather forecasts indicate a bearish market. Overall, the short-term market trend tilts toward caution, necessitating a close watch on demand dynamics.

Technical Analysis

Daily Natural Gas

The natural gas daily chart shows the current price of 3.018 surpasses both the 200-Day and 50-Day moving averages, at 2.719 and 2.687 respectively, indicating bullish momentum. The price has also broken above the trend line resistance of 2.827, further confirming the bullish outlook.

Although the market has surpassed minor resistance at 3.002, it now hovers close to minor support at 2.863 and above main support at 2.699, offering potential downside cushioning.

Given these indicators and levels, the market sentiment for natural gas appears decidedly bullish at this juncture.

About the Author

James Hyerczykauthor

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.

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