Natural Gas News: Bearish Market Forecast as Permian Output and Weather Curb Prices

Natural Gas Futures Decline as Permian Output and Hurricane Helene Influence Supply

U.S. natural gas futures are edging lower, hovering near key technical levels. November Nymex futures traded down early Tuesday, just below the long-term pivot at $2.937, the minor top at $2.948, and the 200-day moving average of $2.970. With bearish momentum in place, a test of the short-term pivot at $2.676 is possible in the near term.

At 13:25 GMT, Natural Gas futures are trading $2.889, down $0.036 or -1.27%.

Pipeline Data Suggests Growing Permian Output

Natural gas futures declined following data indicating potential output growth from the Permian Basin’s Matterhorn pipeline. This reminder of increased supply pressures in October weighed on the market, which had seen a brief rally on Monday. According to Natural Gas Intelligence, Monday’s gains came partially due to a temporary pipeline outage in Canada, which has since been resolved.

Analysts also noted the resumption of normal output flows in key regions, which could curb support for prices in the near term.

Low Demand and Weather Updates

Demand remains subdued across the U.S., with forecasters predicting mild weather for the next week. NatGasWeather noted that much of the country is experiencing comfortable temperatures between the 60s and 80s, with only localized heat in the far southern U.S. and California. The forecast calls for low demand through the first week of October, driven by cooler temperatures and lower heating or cooling needs.

Meanwhile, Hurricane Helene has disrupted energy production in the Gulf of Mexico, with widespread power outages and significant flooding across the Southeast. The storm has left over two million people without power, and more disruptions could emerge with another tropical system forming in the Gulf of Mexico.

Analyst Insights: Price Rise Overstated

David Seduski, Head of North American Gas at Energy Aspects, commented that recent price gains seemed overdone. Supply-demand balances remain largely unchanged despite the storm. While Hurricane Helene has caused some short-term disruptions to offshore production, stagnant output from the Permian and maintenance in Appalachia have tightened the market temporarily.

Seduski emphasized that these supply-side factors are likely to be short-lived, with Gulf production expected to recover, Appalachia maintenance easing, and new pipeline projects potentially increasing Permian output in the coming months. However, in the short term, these factors are limiting daily injections and slowing storage builds.

Market Forecast: Bearish Outlook

The near-term outlook for natural gas prices remains bearish, with ample supply expected to come online and demand remaining low. Although supply disruptions from Hurricane Helene provided some price support, the market appears well-supplied as production normalizes. With weather forecasts predicting low demand and production set to increase, natural gas futures may see further downside pressure in the coming days. Traders should monitor developments in the Permian Basin and the potential for additional tropical storms impacting Gulf Coast production.