Natural Gas News: Futures Fall Today as Hurricane Francine Threatens Demand

U.S. Natural Gas Futures Decline as Hurricane Fears Weigh on Market

U.S. natural gas futures are trending lower on Monday, driven by concerns that a potential hurricane in the Gulf of Mexico may reduce demand by disrupting power supplies. The market has struggled to maintain momentum following a gap lower in early trading, with prices finding resistance at $2.252 and support at $2.145. Despite a solid performance last week, traders are now focusing on weather disruptions and supply levels.

At 13:53 GMT, Natural Gas futures are trading $2.195, down $0.080 or -3.52%.

Hurricane Concerns Overshadow Positive Market Drivers

Natural gas futures dropped on Monday as fears of Hurricane Francine weighed on the market. Market analysts, including Eli Rubin of EBW Analytics, pointed to the potential risks posed by the tropical cyclone, which could reduce gas demand due to cooler temperatures and potential power outages in areas affected by the storm. While the storm’s trajectory remains uncertain, traders are positioning cautiously as potential demand destruction looms.

Moderate Demand and Storage Levels Keep Prices Pressured

U.S. natural gas prices remain under pressure due to moderate national demand and high storage levels. The U.S. Energy Information Administration (EIA) reported a storage injection of 13 billion cubic feet (Bcf) for the week ending August 30, bringing total storage to 3,347 Bcf. This figure exceeds last year’s levels by 208 Bcf and is 323 Bcf above the five-year average. With storage levels elevated and production holding steady near 101 Bcf per day, prices are finding it difficult to gain traction despite occasional bullish factors like lower output and strong liquefied natural gas (LNG) exports.

Weather Outlook and Its Impact on Demand

Forecasts for the week of September 9-15 predict moderate national demand as temperatures in the northern U.S. are expected to range from the 60s to 80s, while southern regions and parts of the West will experience highs in the mid-80s to 100s. Heavy tropical rains in Texas and Louisiana could lead to further power outages, decreasing natural gas demand. NatGasWeather notes that cooler temperatures and disruptions from the tropical cyclone are expected to be bearish for the market unless there is a significant drop in production.

Winter Heating Demand Could Offer Future Support

Looking further ahead, traders are keeping a close eye on the transition from summer to winter, when heating demand typically spikes. While this seasonal shift could provide upward support for natural gas prices, the current oversupply conditions may limit the impact. Any potential price rally during winter would likely depend on colder-than-expected weather or significant supply disruptions.

Market Forecast: Bearish in the Short Term

The short-term outlook for natural gas futures remains cautiously bearish. The key pivot level at $2.252 continues to limit any significant upward movement. If prices fail to break through this level, they may decline toward support at $2.021, with a potential drop to $1.882 if bearish momentum continues. However, if the market manages to surpass $2.252, a short-term rally could ensue, though it would face strong resistance from high storage levels and ongoing robust production. Traders should remain vigilant for any changes in weather forecasts or supply disruptions that could shift the market direction.