Natural Gas Forecast: Prices Firm Despite Mild Weather Predictions

Highlights

• Minor weekend weather changes, but strong demand expected next 5 days
• U.S. to experience active weather pattern, affecting demand in different regions
• Despite mild weather predictions, natural gas prices increase

Overview

Natural gas is edging higher on Monday after an uneventful weekend. According to NatGasWeather, there were only minor changes in the weekend weather data, with strong demand the next 5-days due to late season cool shots, then easing to light to very light levels May 6-13 as most of the U.S. experiences perfect highs of 60s to 80s besides only locally hotter 90s.

At 13:12 GMT, Natural Gas is trading $2.2305, up 0.0045 or +0.20%. On Friday, the United States Natural Gas Fund ETF (UNG) is trading $7.01, up $0.13 or +1.89%.

Active Weather to Affect US

From May 1-7, the US will experience an active weather pattern, with several weather systems causing showers across the country. The Midwest and Northeast will have the coldest temperatures, with highs in the 50s and 60s and lows in the 30s and 40s, leading to stronger than normal demand. Conversely, the South and Southeast will enjoy comfortable temperatures with highs in the upper 60s to 80s, resulting in lighter than normal demand. The West will have mild to warm temperatures with highs in the 50s to 80s, except for the hotter 90s in the Southwest deserts.

Record U.S. LNG Exports Continue

In April, U.S. LNG export plants were poised to reach a record high for the second consecutive month, thanks in part to Freeport LNG’s export plant in Texas resuming operations after an eight-month shutdown in February.

Gas Prices Rise Despite Bearish Factors

Despite production almost hitting record highs and predictions of seasonally mild weather and reduced heating demand in mid-May, gas prices have increased. The contract has risen about 9% for the week, marking the third week in a row, the first such occurrence since July 2022, with the largest one-week percentage increase since it climbed 23% in early March. The front-month was up approximately 11% for the month after a 19% drop in March, representing its most significant one-month percentage gain since it increased by 52% in July 2022.

EIA Supply Exceeds Expectations

According to a survey by S&P Global Commodity Insights, analysts expected a storage increase of 72 billion cubic feet on average, but the US Energy Information Administration reported on Thursday that domestic natural gas supplies rose by 79 billion cubic feet for the week ending April 21. The government reported that the total working gas in storage for the latest week was at 2.009 trillion cubic feet, which is 525 billion cubic feet higher than the previous year and 365 billion cubic feet above the five-year average.

Technical Analysis

From a daily technical viewpoint, Natural Gas is currently above the pivot point of $2.168, making this level new support.

A sustained move over the pivot will indicate the buying is getting stronger. If this creates enough upside momentum then look for a near-term surge into the resistance (R1) at $2.432.

A sustained move under the pivot will signal the presence of sellers. This could trigger a near-term acceleration into the support (S1) at $1.962.

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