Natural Gas Prices Forecast: Futures Waver Amid Weather Variability, Potential Australian LNG Strike

Highlights

• US natural gas futures faced a decline on Tuesday.
• Refinitiv foresees potential drop in gas demand despite the heat.
• August’s US gas output slightly down from July’s numbers.
• Decrease noted in gas flows to major US LNG export plants in August.
• Australia’s labor tensions could disrupt global LNG supply.

US Natural Gas Futures React to Mixed Signals

US natural gas futures are experiencing a setback on Tuesday, despite a strong upturn the previous day. Factors include varying weather projections, demand concerns, potential strikes in Australia, and fluctuations in US LNG consumption.

Weather and Demand Dynamics

The hot weather forecasted until early September, especially in Texas, fueled a 3% rise in U.S. natural gas futures on Monday. This heatwave sustains high air conditioning demand. Still, Refinitiv reports that even with temperatures remaining high, U.S. gas demand might drop in the coming weeks due to the seasonal shift. Meanwhile, NatGasWeather points out impressive heatwaves hitting the US interior, forecasting a cooler pattern for the last week of August.

Supply Landscape

US gas output showed a slight dip in August from 101.8 billion cubic feet per day (bcfd) in July to 101.7 bcfd. Despite this, May saw a record monthly supply of 102.2 bcfd. However, gas flows to major U.S. LNG export plants decreased from 12.7 bcfd in July to 12.3 bcfd in August, largely due to reductions at Cheniere Energy’s facility in Louisiana.

Geopolitical Implications

Australia, the world’s leading LNG exporter, is amidst labor tensions. Workers at Woodside’s North West Shelf and Chevron’s projects threaten to strike over wage concerns. This possibility has spurred global LNG prices as any disruption in Australia’s supply would have a profound global impact. Woodside’s CEO, Meg O’Neill, underscores the company’s focus on understanding workers’ concerns while also emphasizing their responsibility to stakeholders.

Short-Term Forecast

The potential strike in Australia, alongside other bullish factors, could support an upward trend in natural gas futures. Mixed demand and varying weather forecasts introduce volatility, but supply disruptions, especially from a significant player like Australia, are likely to have a pronounced bullish effect on prices.

At this time, the focus seems to be on the mixed weather-demand outlook, but this could change quickly if a strike is announced.

Technical Analysis

4-Hour Natural Gas

Natural Gas is currently trading at 2.571, slightly below its previous 4-hour close of 2.579. When analyzing the moving averages, the current price resides below both the 200-4H and 50-4H moving averages, with values at 2.658 and 2.685, respectively. This indicates a bearish momentum in the short term. Further supporting this bearish outlook is the 14-4H RSI which stands at 39.13, suggesting weakening momentum but not yet in the oversold territory.

The current price is positioned closer to the main support area (2.542 to 2.487) rather than the main resistance zone (3.027 to 3.091), underlining the bearish sentiment in the market.