Natural Gas News: Futures Rally Amid LNG Rebound, Supply Slowdown

Market Overview

Natural gas futures held above $2 on Tuesday, extending gains from the previous session. The rally was fueled by several factors, including the full restart of Freeport LNG’s third train, supply interruptions in the Permian Basin, and forecasts indicating below-average storage injections.

At 13:13 GMT, Natural Gas Futures are trading $2.042, up $0.012 or +0.59%.

Factors Driving the Rally

The complete restart of Freeport LNG’s third train provided a significant boost to market sentiment. Additionally, supply disruptions in the Permian Basin contributed to the bullish momentum. These supply-side factors, combined with expectations of reduced storage injections, prompted traders to push natural gas futures higher.

Record High US LPG and LNG Exports

US LPG and LNG exports have reached unprecedented levels in 2024, reflecting the country’s position as a leading exporter of liquefied natural gas. Strong production levels have supported robust export demand, with the US remaining a key swing supplier in the global LNG market.

Strong Asian Demand and Market Trends

Asian demand continues to be a driving force in the LPG market, with significant production in the US meeting robust Asian PDH demand. The arbitrage to Asia remains open, supported by positive PDH margins and strong buying appetite. Despite quieter downstream demand in Europe, ample supply from the US ensures sufficient product availability.

Bullish Analyst Outlook

Despite recent price declines and concerns about supply glut, analysts maintain a bullish outlook for natural gas prices. Growing artificial intelligence (AI) electricity demand is expected to boost natural gas consumption, with AI technologies driving increased power requirements. Analysts anticipate continued volatility in natural gas futures, with potential for further price appreciation in the near term.

Short-Term Forecast

Traders should anticipate continued strength in the natural gas market, supported by robust export demand, supply disruptions, and evolving energy consumption patterns driven by AI technologies. The market outlook remains positive, with potential for further price appreciation as traders monitor supply trends and demand trends closely.

Technical Analysis

Natural gas futures are higher for a second session on Tuesday, putting the 50-day moving average at $2.199 on the radar. Trader reaction to a test of this level will determine the intermediate trend.

From a longer-term perspective, we would like to see an elongated support base built before buyers make a run at the 50-day MA.