US Natural Gas Futures Rise as Utilities Draw Less Gas from Storage

Key Takeways

• US natural gas futures increase, but lower demand resulting from less cold weather forecasts limits the gains.
• The US Energy Information Administration (EIA) reports utilities drew less gas from storage compared to the same period last year and five-year average.
• Refinitiv predicts a decrease in US gas demand, including exports, from 120.5 billion cubic feet per day (bcfd) to 117.8 bcfd next week.
• Federal regulators approve restart of Freeport LNG’s three liquefaction trains, increasing US LNG export capacity.

Overview

US natural gas futures rose on Thursday, following gains in the wider financial markets. Less gas from storage for heating was used by utilities following forecasts of less cold weather, resulting in a limited increase.

On Thursday, May natural gas futures settled at $2.626, up $0.080 or +3.14%. The United States Natural Gas Fund ETF (UNG) settled at $8.35, up $0.25 or +3.02%.

US Gas Stockpiles Drop to 36% Above Average

The EIA reported that utilities drew 58 billion cubic feet of gas from storage during the week ending March 10.

This is lower than the 62 billion cubic feet forecast by analysts. And a decrease from the same week last year and the five-year average.

Stockpiles now stand at 1.972 trillion cubic feet, or 36% above the five-year average.

Refinitiv Predicts Decrease in US Gas Demand Next Week

Refinitiv, a data provider, predicted that US gas demand, including exports, would decrease from 120.5 bcfd this week. It is expected to be 117.8 bcfd next week.

Freeport LNG’s Trains Approved for Restart after Fire Outage

Federal regulators approved the restart of two of Freeport LNG’s three liquefaction trains in February, and the third on March 8th. Liquefaction trains are used to accomplish the process of turning gas into LNG.

Since the Freeport LNG export plant in Texas resumed operations after an eight-month outage caused by a fire last year, gas flows to LNG export plants have been on track to reach record highs.

When working at full capacity, Freeport LNG can produce about 2.1 billion cubic feet of gas for export. Together, the seven largest LNG export plants in the US, including Freeport LNG, can produce about 13.8 billion cubic feet of gas for export.

Daily Natural Gas Technical Analysis

The main trend is down according to the daily swing chart. A trade through $2.499 will signal a resumption of the downtrend. A trade through $2.789 will change the main trend to up.

The short-term range is $2.263 to $3.156. The futures contract settled inside its retracement zone at $2.710 – $2.604.

The main range is $3.321 to $2.263. Its 50% level at $2.792 is the first upside target. The minor range is $3.156 to $2.514. Its retracement zone at $2.828 – $2.905 is a second upside target.

Daily Natural Gas Technical Forecast

Trader reaction to the Fibonacci level at $2.604 is likely to determine the direction of the May natural gas futures market on Friday.

Bullish Scenario

A sustained move over $2.604 will indicate the presence of buyers. This could lead to the start of a labored rally with the first target a 50% level at $2.710, followed by a resistance cluster at $.789 – $2.792.

Bearish Scenario

A sustained move under $2.604 will signal the presence of sellers. The first downside target is this week’s low at $2.499. This level is a potential trigger point for an acceleration to the downside with $2.263 the next major target.