Natural Gas Prices Forecast: US Shale Production Growth to Slow in March

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Published: Feb 13, 2024, 13:28 UTC

Natural gas futures are trading flat amid a selling bias, warm Feb weather, and modest March shale growth forecast.

Key Points

Natural gas futures trade flat, indicating market uncertainty.
Forecasted warm weather likely to reduce heating demand.
Shale production growth to slow, reflecting strategic caution.

Market Overview

Natural gas futures are trading flat on Tuesday, indicating a lack of clear direction in the market. This stability suggests traders are testing for support, but the overall sentiment remains tilted towards selling, with any rallies likely to be temporary.

Weather’s Role in Pricing

Current weather forecasts show a trend towards warmer conditions in the coming days, particularly from February 21-23. This warming is expected to significantly reduce heating demand, which is already reflected in the six consecutive sessions of declining natural gas prices.

U.S. Shale Production Insights

U.S. shale production is set to grow at a slower pace in March 2024, with an estimated increase of only 0.2% from February. This rate is notably lower than last year’s average month-over-month growth of about 0.9%. The more cautious approach from shale operators, focusing on financial efficiency and investor returns, is a key factor in this slowdown.

Global Market Considerations

The recent trends in U.S. shale production and the overall high U.S. oil output have a significant bearing on global oil prices and strategies of major players like OPEC. Their response to these developments will be crucial for both oil and natural gas markets.

Short-term Outlook

Considering the warmer weather forecast and the moderated pace of shale production growth, the natural gas market is expected to maintain a downward trend in the short term. Traders should, however, be vigilant for any sudden shifts in weather patterns or strategic changes in production, which could quickly impact market trends.

Technical Analysis

Daily Natural Gas

Natural gas futures are nearly flat on Tuesday. In the midst of a prolonged downtrend in terms of price and time, this could be a sign it’s oversold and getting ready to transition. By oversold, I don’t mean a technical indicator, I mean that it’s running out of sellers. Whatever the reason, it may be ripe for a counter-trend reversal with the 50-day moving average at $2.040 the primary upside target.

Nonetheless, while a rally this size would be exciting after the steep fall, it’s just them to shake out the weak shorts and allow the major players to re-enter at more favorable price levels.

Essentially, we’re looking for a bear market rally.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.