Natural Gas News: Freeport LNG Resumes, But Market Struggles with Supply-Demand Dynamics

Natural Gas Prices Retreat Tuesday Despite Freeport LNG Restart

Natural gas futures are edging lower on Tuesday, retreating from Monday’s gains as the market continues to grapple with supply-demand dynamics. This downward movement comes after the August contract rose 4.3% to $2.220 per million British thermal units (mmBtu) on Monday, marking the third consecutive session of gains at that time.

At 13:03 GMT, Natural Gas Futures are trading $2.199, down $0.052 or -2.31%.

Freeport LNG Resumes Operations

Freeport LNG, the second-largest U.S. liquefied natural gas exporter, has resumed shipments following a shutdown due to Hurricane Beryl. The facility is ramping up processing, with gas flows expected to reach around 1.0 billion cubic feet per day (bcfd) on Monday. This restart is crucial for the market, as Freeport LNG accounts for a significant portion of U.S. export capacity.

Production and Weather Factors

U.S. natural gas production has reportedly decreased by more than 1 Bcf compared to last week, which contributed to Monday’s price gains. Weather forecasts indicate hot conditions for most of the U.S. in the 8-15 day outlook, potentially boosting demand for cooling.

Market Challenges

Despite Monday’s rally, the natural gas market still faces significant headwinds. Large supply volumes and high production levels continue to pressure prices. The recent upward movement was likely driven by short-covering rather than strong buying interest, suggesting caution is warranted.

Technical Resistance and Trading Outlook

Futures faced technical chart resistance at $2.232 on Monday and early Tuesday. Traders will need to overcome this level decisively to potentially trigger further short-covering. The market’s ability to sustain gains above this resistance point could provide insight into the strength of the current price action.

Market Forecast

While the Freeport LNG restart and potential increase in cooling demand offer some support, the overall market outlook leans bearish in the short term. The combination of ample supply and production capacity continues to outweigh bullish factors. Traders should monitor Freeport LNG’s ramp-up progress, weather developments, and technical price levels for potential trading opportunities. However, caution is advised given the persistent supply-side pressures in the natural gas market.

Technical Analysis

Natural gas futures are edging lower on Tuesday after a short-term pivot stopped the three-day rally.

The short-term range is $2.448 to $2.015. It’s 50% level at $2.232 is the resistance level buyers must overcome to sustain the rally. Taking out this level with conviction could lead to a quick test of the minor top at $2.448.

On the downside, the new minor range is $2.015 to $2.270. Look for a possible pullback into its pivot today at $2.1425. If buyers step in on a pullback to this level then look for the start of a meaningful rally.