Natural Gas Prices Forecast: Set for Rise with January Chill

Highlights

• U.S. natural gas futures trying to build on Thursday’s rally
• Weather forecasts influencing heating demand
• Strong LNG exports, mixed long-term market outlook

Current Market Movement

Following Thursday’s significant rally, U.S. natural gas futures are experiencing a notable shift today. This movement is driven by a combination of factors, including current weather forecasts, recent storage data, and the ongoing demand for liquefied natural gas (LNG).

Weather’s Impact on Gas Consumption

Revised forecasts now show milder weather continuing through the end of December, with a shift to colder temperatures expected in early January. These weather patterns are crucial in determining the demand for natural gas, particularly for heating.

Storage and Supply Status

The U.S. Energy Information Administration (EIA) reports a more significant than anticipated withdrawal from natural gas storage, with 87 billion cubic feet removed in the week ending December 15. Despite this reduction, supplies still stand well above the five-year average, indicating a robust supply buffer.

LNG Export Demand Remains Strong

The U.S. maintains a high demand for LNG exports, with December marking a record in gas flows to major LNG export facilities. This sustained demand for LNG exports remains a key driver in the overall natural gas market, underscoring the global dependence on U.S. energy exports.

Market Outlook

The immediate outlook for the U.S. natural gas market is trending positively, driven by the anticipated increase in heating demand due to the upcoming colder weather. However, the long-term perspective is mixed, with potential delays in LNG export facility expansions possibly affecting future demand and prices. This scenario presents an intricate and evolving picture for the natural gas market in the forthcoming year.

Technical Analysis

The current daily price of natural gas at 2.591 is slightly above its minor support and resistance level of 2.590, indicating a crucial pivot point in the market. It’s also just above the 50-day moving average of 3.060 and below the 200-day average of 3.245, suggesting a neutral to slightly bearish sentiment in the medium to long term.

This positioning reflects a market that is still deciding its direction, with potential for both upward and downward movements. The close proximity to both key moving averages and pivotal support/resistance levels points towards a potentially volatile phase, where market sentiment could quickly shift based on emerging trends and external factors.