Natural Gas Prices Forecast: New Weather Predictions Adding Volatility to Futures

Highlights

• Early natural gas price action, marking a tepid gain amid investor uncertainty.
• Seasonal demand for NatGas holds steady, but 10-15 day outlooks add a layer of unpredictability.
• IEA report predicts a slowdown in global natural gas demand through 2026.
• Geopolitical tensions and labor unrest heighten concerns over global natural gas supply.

Natural Gas Markets Grapple with Uncertainties

Natural gas futures experienced only a modest uptick early Tuesday, settling at $3.382 for November contracts, a gain of just $0.006 or +0.18% at 10:47 GMT. This marginal move appears to reflect investor uncertainty, coming on the heels of a substantial 70-cent rally across a four-day trading window.

Weather Predictions: A Mixed Bag

Seasonal demand for natural gas is expected to remain stable for the next nine days, according to NatGasWeather outlooks. However, a warming trend is anticipated in the 10-15-day forecast, creating speculation over the potential for cooler conditions to emerge, similar to what we’ve seen this week. This adds an element of unpredictability in short-term supply and demand equations.

Global Trends: Slowing Demand and European Quandary

A report by the International Energy Agency (IEA) indicates a foreseeable slowdown in global demand for natural gas until 2026. This comes as mature markets like North America and Europe peak, prompting a diversification in energy sources. Particularly in Europe, the reduction in pipeline gas supplies from Russia is pushing governments to seek alternative solutions to secure their energy futures. This scenario adds a layer of complexity to the already volatile market.

Geopolitical Factors and Labor Unrest

Worldwide, the natural gas supply is further imperiled by geopolitical tensions in the Middle East, alongside potential strikes at liquefied natural gas (LNG) export facilities in Australia. Both are contributing to the rising nervousness among traders.

If Australia, the world’s biggest LNG exporter in 2022, sees a decrease in exports due to strikes, it could create an additional upward pressure on global prices, including in the U.S., which is set to become the world’s leading LNG exporter by 2023.

Short-Term Outlook: Cautiously Bullish

Considering the array of factors at play—from unpredictable weather patterns to geopolitical issues and shifts in global demand—the market appears to be cautiously bullish in the short term.

Traders should remain vigilant for sudden shifts in weather, as well as political or labor-related developments that could significantly impact supply and demand, thereby affecting prices.

Natural Gas Technical Analysis

Daily natural gas is trading $3.369, positioned above both the 200-Day moving average of $2.669 and the 50-Day moving average of $2.740, indicating a bullish underlying trend.

The market has found minor support at $3.184 and main support at $3.002, suggesting a solid foundation for the current uptrend.

Conversely, minor resistance at $3.406 is just above the current price level, with main resistance standing significantly higher at $3.793, making them valid targets.

With the market currently straddling minor resistance at $3.406, the market may be poised for an upside breakout over this level.

Overall, the market sentiment leans bullish, supported by the price’s position relative to its moving averages and minor resistance level.