Natural Gas Forecast: Testing Two-Week High on Cooler Weather and LNG Exports

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Updated: Apr 28, 2023, 16:32 GMT+00:00

US natural gas futures surge on predictions of cooler weather, greater short-term demand and record LNG exports.

Natural Gas Highlights

Natural gas futures surge on cooler weather and record-high LNG exports
Prices increase despite increased production and seasonally mild weather forecasts
Front-month up 11% for the month, largest gain since July 2022

Natural Gas Overview

On Friday, U.S. natural gas futures surged by roughly 4% to a two-week peak, wiping out earlier losses, as a result of predictions of cooler weather and greater heating demand next week, in addition to a record level of liquefied natural gas (LNG) exports.

At 14:30 GMT, Natural Gas is trading $2.204, up $0.025 or +1.15%. The United States Natural Gas Fund ETF (UNG) is at $6.95, up $0.07 or +1.02%.

US LNG Exports Hit Record High

Meanwhile, U.S. LNG export plants were on course to reach a record high for the second consecutive month in April, following Freeport LNG’s export plant in Texas ending an eight-month shutdown in February.

Despite production increasing to almost record highs and the latest forecasts calling for seasonally mild weather and reduced heating demand in mid-May, gas prices increased.

Largest Monthly Gain Since July 2022.

The contract has risen by about 9% for the week, marking the third week in a row, which is the first since July 2022, with the largest one-week percentage increase since it climbed 23% in early March. The front-month was up around 11% for the month after dropping about 19% in March, which would be its largest one-month percentage gain since it increased 52% in July 2022.

US Natural Gas Supplies Exceed Forecasts

According to a survey conducted by S&P Global Commodity Insights, analysts anticipated a storage increase of 72 billion cubic feet on average, but the U.S. Energy Information Administration reported on Thursday that domestic natural gas supplies rose by 79 billion cubic feet for the week ended April 21.

Gas Storage 365 Bcf Above Avg

The government stated that total working gas in storage for the latest week was at 2.009 trillion cubic feet, which is an increase of 525 billion cubic feet from the previous year and 365 billion cubic feet above the five-year average.

Technical Analysis

Daily Natural Gas

From a daily technical viewpoint, Natural Gas is currently below the pivot point of $2.353. Nevertheless, breaking through this level could signal a demonstration of strength and extend the rally in the short term, possibly pushing it towards R1 at $2.727.

Conversely, a continuous drop below the pivot point could indicate the existence of sellers in the market. This could create downward momentum, possibly resulting in a test of S1 at 1.695.

The daily chart indicates there is room to the upside for a strong short-covering rally.

S1 – $1.695	PIVOT – $2.353
	R1 – $2.727

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.