Natural Gas Prices Forecast: Traders Focused on Weather, Storage, LNG Demand

Highlights

• U.S. natural gas futures stable in light trading.
• EIA reports decrease in natural gas supplies.
• Freeport LNG reopening impacts global gas market.

U.S. Natural Gas Futures Stable in Light Trading Session

In Friday’s shortened trading session, U.S. natural gas futures remained nearly flat, influenced by thin trading volume and a focus on weather forecasts, storage levels, and LNG demand. This stability comes despite recent fluctuations in the energy market.

Weather and Storage Impact on Gas Prices

Earlier in the week, the Energy Information Administration (EIA) reported a 7 Bcf draw from natural gas storage, contrary to expectations of a slight increase. This unexpected draw led to a price jump, signaling bullish sentiment among traders. However, mild weather across the U.S., coupled with near-record production, has kept natural gas prices at early October lows. The forecast for colder weather in northern and central U.S. regions could boost demand.

EIA’s Storage Report and LNG Developments

The EIA’s report on a small decrease in natural gas supplies contrasts with predictions of an increase. Despite being above year-ago levels and the 5-year average, high supply levels and continued mild weather have pressured prices. Simultaneously, developments at the Freeport LNG export plant, which recently received approval to return to full operation, are expected to impact global markets, particularly with winter approaching.

Freeport LNG Plant’s Role in Global Gas Markets

The return to full operation of the Freeport LNG plant, following a shutdown due to a fire, is significant for global gas markets. The plant’s full capacity can convert around 2.1 billion cubic feet of gas per day into LNG, contributing substantially to global supply, particularly against the backdrop of reduced Russian gas supplies to Europe.

Outlook for Natural Gas Market

The U.S. natural gas market appears cautiously steady, balancing domestic weather and storage factors with global LNG dynamics. The reopening of Freeport LNG adds a significant element to the global supply chain, potentially influencing future price movements as winter demand escalates.

Technical Analysis

The current daily price of natural gas at 2.876 is positioned between its 50-day moving average of 3.059 and its 200-day moving average of 2.613. This placement indicates a somewhat neutral trend, as the price is below the shorter-term average but above the longer-term one.

Currently, the price is slightly above the minor support level of 2.838, suggesting a potential for stability or a mild uptrend if this support holds. However, approaching the minor resistance level at 3.002 could be a key test for any bullish momentum. If the price can break through this resistance, the next focal point would be the main resistance at 3.184.

Overall, the market sentiment for natural gas, considering its current pricing relative to these technical indicators, appears cautiously neutral with a potential lean towards bullishness if it can maintain above the minor support and challenge the resistance levels.