Natural Gas News: Freeport LNG Resumption Brightens Outlook

U.S. Natural Gas Market Update

U.S. natural gas futures edged higher early Monday on the New York Mercantile Exchange, attempting to stabilize after last week’s sharp decline, which saw prices plummet to their lowest since late March. This modest rebound came as the market grappled with softer production levels and the prospect of stronger export demand.

At 13:45 GMT, Natural Gas Futures are trading $1.965, up $0.042 or +2.18%.

Price Influences and Storage Surplus

A marked downturn in prices last week was notably influenced by a decrease in feedgas deliveries to Freeport LNG’s Texas export terminal, tipping the market towards a supply-heavy situation. Adding to the bearish sentiment, the latest U.S. Energy Information Administration (EIA) report showed an unexpected rise in storage injections—92 billion cubic feet (bcf) versus the anticipated 82 bcf. This injection swelled total gas storage to 2,425 Bcf, a significant elevation from last year by 439 Bcf and surpassing the five-year average by 655 Bcf.

Operational Disruptions and Export Demand

The U.S. and European markets felt the impact of recurring disruptions at Freeport LNG, which contributed to the downward price pressure. Nonetheless, the recent movement of the first tanker since these interruptions might signal a move towards normalizing export operations, potentially stabilizing the market.

Production Declines and Demand Forecasts

Amid these issues, natural gas production in the Lower 48 states has seen a decrease from 100.8 billion cubic feet per day (bcfd) in March to 96.9 bcfd in April. Forecasts suggest a further dip in demand from 92.2 bcfd to 91.7 bcfd in the coming week. These production cuts, coupled with a lukewarm demand outlook, highlight the ongoing market challenges.

Market Outlook

The short-term outlook for the U.S. natural gas market continues to be bearish, driven by an excess in both storage and production. While the resumption of operations at Freeport LNG may offer some relief, the prevailing conditions of abundant supply and controlled demand suggest that prices will likely remain subdued. Traders should anticipate these persisting market conditions as they prepare for upcoming trading sessions.

Technical Analysis

Natural gas futures are attempting to consolidate slightly below the psychological $2.00 level.

The trend is down. A trade through $1.909 will signal a resumption of the downtrend.

The short-term trend will change to up on a trade through $2.196. Overtaking the 50-Day Moving Average at $2.202 will change the intermediate trend to up.