Natural Gas Forecast: Futures Approaching June Peak Amid Rising Demand

Highlights

• Futures nearing June 26 high of 2.878.
• Warm forecasts increase national demand.
• Export fluctuations could influence trends.

Overview

U.S. natural gas futures are nearing their June 26 high of 2.878, a pivotal point for potential upward acceleration. As of 11:33 GMT, the commodity was trading at 2.719, marking an increase of 0.59%. This uptick can be attributed to warmer weather forecasts for the next couple of weeks, pushing national demand higher. According to NatGasWeather, weather predictions for August 13-20 remain significantly warm, suggesting that surpluses may see a decline in the upcoming weeks, tightening the supply-demand balance.

Weather Forecasts Call for High Demand

Weather forecasts from August 7-13 indicate high pressure prevailing in the southern U.S., with temperatures soaring between the upper 80s and 110s, particularly from California to Texas. In contrast, the northern U.S. will experience cooler weather systems, with highs ranging between 70s and 80s. By the weekend, the East will warm up, showing a temperature increase to mid-80s to 90s. Given these conditions, demand will likely shift from seasonal to high, especially during the weekends.

Heat Trending Until at Least August 19

Furthermore, meteorological predictions anticipate the weather across the Lower 48 states to remain hotter than average until at least August 19. Consequently, data from Refinitiv suggests that the U.S. gas demand, inclusive of exports, will ascend from 102.4 billion cubic feet per day (bcfd) to 105.8 bcfd in the forthcoming week. This surge in demand arises as power generators ramp up fuel usage and exports witness an uptick.

LNG Export Demand Lower in August

However, it’s essential to note that the average gas output in the U.S. Lower 48 states for August was 102.2 bcfd, a slight increase from July’s 101.8 bcfd, equating the record set in May. In comparison, gas flows to the major U.S. LNG export plants have dipped marginally this month, primarily due to reductions at Cheniere Energy’s Sabine Pass in Louisiana.

Short-Term Outlook:  Cautiously Bullish

In light of the warmer forecasts and rising demand, the short-term outlook for U.S. natural gas futures remains bullish, but traders should stay vigilant of fluctuating export figures.

Technical Analysis

Natural Gas’s current 4-hour price of 2.709 indicates a marginal increase from the previous 4-hour level of 2.703, suggesting a subtle bullish inclination. Observing the moving averages, the present price remains above both the 200-4H moving average at 2.656 and the 50-4H moving average at 2.605, reinforcing this bullish trend.

The bullish sentiment is further supported by the 14-4H RSI, which, at 66.70, leans towards the overbought region, denoting stronger momentum.

Notably, the commodity’s price is closer to its main resistance range of 2.782 to 2.836 than the main support zone of 2.542 to 2.487, indicating a potential challenge ahead.

These technical indicators suggest that the short-term market sentiment for Natural Gas leans bullish, but traders should exercise caution because of the nearby resistance.