Natural Gas News: Futures Firm Ahead of Weekly EIA Storage Report

U.S. Natural Gas Market Update

U.S. Natural Gas futures showed a slight increase early Thursday, in anticipation of the Energy Information Administration’s (EIA) storage report due later today. This follows a period of declining prices on Wednesday influenced by favorable weather conditions and subdued liquefied natural gas (LNG) demand, despite lower production levels.

At 13:08 GMT, Natural Gas Futures are trading $1.968, up $0.036 or +1.86%.

EIA Storage Report Preview

Analysts are setting their sights on today’s EIA storage report, scheduled for release at 14:30 GMT, with projections suggesting a storage build of +55 to +57 billion cubic feet (Bcf). This expected increase, although significant, is still below the five-year average of +72 Bcf. Should these forecasts hold true, the surplus is anticipated to drop to around +635 Bcf. This comes after a cooler than usual period over the eastern two-thirds of the United States, balanced by warmer temperatures in the West, according to NatGasWeather.

Market Influences

The Natural Gas market is currently experiencing mixed signals. On one hand, the demand for natural gas is generally low, expected to remain so over the next week, except for sporadic warmth in Texas and the South. On the other hand, negative pricing at the Waha hub in West Texas has persisted, reflecting ongoing high production levels and limited takeaway capacity. Despite this, Permian producers are maintaining steady natural gas production, undeterred by the low prices, focusing instead on maximizing oil revenues which remain robust above $80 per barrel.

Infrastructure and Export Dynamics

The Permian basin’s infrastructure is under stress due to maintenance and capacity constraints, yet new pipelines expected in the coming months may relieve some pressure. Additionally, LNG exports from the U.S. Gulf Coast are anticipated to rise steadily, supported by long-term contracts. This expected increase in demand could eventually help balance the current oversupply in the market.

Market Outlook

Given the current dynamics, the market outlook appears cautiously optimistic. The anticipated increase in LNG export demand and upcoming infrastructure improvements suggest a potential stabilization in natural gas prices. However, traders should remain vigilant, as the market responds to today’s crucial EIA report and ongoing developments in production and export capacities.

Technical Analysis

Natural gas futures are consolidating for the fifth straight session as investors await the catalyst that could signal the next change in trend.

A trade through $1.909 will signal a resumption of the downtrend, while a move through $2.092 changes the trend to up. This move will likely be fueled by short-covering.

Another trigger point for a change in trend and a possible acceleration to the upside is the 50-day moving average at $2.185.