Natural Gas News: Futures Hold Steady Amid Consolidation

U.S. Natural Gas Futures Remain Stable Amidst Consolidation

U.S. natural gas futures showed minimal movement, indicating a near-flat trend, following an unsuccessful attempt to sustain a rally sparked by yesterday’s surge in prices. The market’s indecisive behavior suggests that Thursday’s upturn was primarily fueled by aggressive short-covering rather than fresh buying interest. This indicates a continuation of the ongoing consolidation phase, with the duration of the base potentially influencing future price movements.

At 13:16 GMT, Natural Gas Futures are trading $2.063, up $0.028 or +1.38%.

EIA Storage Report Exceeds Analyst Expectations

On May 2, 2024, the Energy Information Administration (EIA) released its Weekly Natural Gas Storage Report, revealing a 59 Bcf increase in working gas in storage compared to the previous week. Analysts had anticipated a more modest rise of 55 Bcf, indicating that the report surpassed market expectations.

Stocks currently stand at levels significantly higher than the previous year, with a surplus of 436 Bcf compared to last year and 642 Bcf above the five-year average of 1,842 Bcf. The abundance of inventory serves as a prominent bearish factor for the natural gas market.

Market Trends Amidst Oversupply

Natural gas prices are responding to the EIA report, attempting to stabilize near recent lows. Despite the looming threat of high inventories, traders are exhibiting confidence in the market’s bottoming out, largely disregarding the surplus and speculating on potential increases in liquefied natural gas (LNG) exports. However, the market remains oversupplied in the near term, with subdued demand requiring positive shifts in weather forecasts to sustain upward momentum.

Impact of LNG Canada Terminal

The impending launch of LNG Canada, the country’s inaugural LNG export terminal, is poised to strain domestic natural gas supplies for several years, potentially leading to reduced exports to the U.S. The facility, capable of processing up to 2 billion cubic feet per day (bcfd), represents a significant portion of current Canadian gas output. The surge in LNG projects signals a shift in Canada’s gas export focus away from the U.S. market, potentially reshaping North American gas trade patterns.

In conclusion, while natural gas futures navigate through a phase of consolidation, heightened attention is drawn to supply-demand trends influenced by factors such as inventory levels and emerging export ventures like LNG Canada. Traders remain vigilant for signals of market stabilization amidst the ongoing challenges posed by oversupply and shifting export patterns.

Technical Analysis

If you’re trying to pick a bottom then your focus should be on the minor trend. A move through $2.092 will change the minor trend to up and shift momentum to the upside. A trade through $1.909 will signal a resumption of the downtrend, but could be a risk short.

If you’re not trying to pick a bottom then keep selling rallies with the 50-day moving average at $2.181, your lean. However, keep in mind that this could be the trigger point for an acceleration to the upside.