Natural Gas News: Weather Patterns, LNG Demand Drive Prices Through 50-Day MA

US Natural Gas Futures Gain on Rising Demand and Supply Concerns

U.S. natural gas futures climbed significantly on Wednesday, driven by robust investor interest and key market developments. The prices moved beyond the pivotal 50-day moving average to establish a new support level at $2.179.

At 12:57 GMT, Natural Gas Futures are trading $2.264, up $0.057 or +2.58%.

Demand Uptick and Weather Patterns

The forecasted increase in demand over the next two weeks significantly contributed to the price rise, mainly due to heightened requirements for feedgas at LNG export facilities like the recently restarted Freeport LNG in Texas. Weather reports indicate high temperatures persisting in Texas, the South, and Southeast until Thursday, supporting strong regional demand. However, a cooldown is expected as new weather systems bring cooler temperatures and rainfall across the eastern and southern U.S., which may reduce demand slightly.

Investor Sentiment and Market Speculation

Investor sentiment towards European gas has turned more bullish, echoing the urgency seen in early 2022. This shift is evidenced by the rise in net-long positions in Dutch gas futures, now at their highest since the geopolitical disruptions of February 2022. This trend highlights growing concerns over possible supply shortages as summer approaches.

Supply Constraints and Production Cuts

U.S. gas production has decreased by about 9% in 2024, influenced by reduced drilling activities from major producers like EQT and Chesapeake Energy. Additionally, upcoming pipeline maintenance by Kinder Morgan could temporarily tighten supplies further, possibly pushing prices at the Waha Hub in West Texas into negative territory for the first time since mid-April.

Market Forecast

Considering the expected demand increases, speculative market behavior, and ongoing supply adjustments, the short-term outlook for U.S. natural gas futures appears bullish. Market participants should remain vigilant regarding weather updates and pipeline maintenance schedules, as these will play crucial roles in upcoming price movements.

Technical Analysis

Natural gas futures are higher on Wednesday, solidifying its bullish move over the 50-day moving average at $2.179. This level is new support. A sustained move over this price will signal the presence of buyers. It’s important that we see fresh buying rather than just short-covering, or the rally will fail.

The next trigger point for an upside breakout is the April 10 main top at $2.291. The daily chart indicates there is plenty of room to the upside above this price.

On the flipside, crossing back under the 50-day moving average will turn the intermediate trend to down.