Natural Gas News: Futures Flat as Traders Weigh Weather-Driven Demand Forecast

U.S. Natural Gas Futures Steady as Weather-Driven Demand Looms

U.S. natural gas futures remained flat on Wednesday as traders evaluated the potential for increased weather-driven demand. This follows a mixed performance on Tuesday, where futures ended lower after five consecutive days of gains, driven by profit-taking. The recent surge was fueled by reduced gas production, which had earlier propelled prices upward.

At 12:30 GMT, Natural Gas Futures are trading $2.171, up $0.023 or +1.07%.

Market Activity and Technical Levels

Tuesday’s natural gas production was recorded at 100.6 billion cubic feet per day (Bcf/d), a level that typically pressures prices downward. The market is now eyeing the previous support level at $2.149; a break below this could lead to a further decline towards $2.069. This comes after Monday’s breakout rally and Tuesday’s reversal, indicating a volatile trading environment.

Bullish Sentiment and Market Support

The ongoing rally has been bolstered by increased bullish sentiment among money managers, with net long positions reaching a six-week high in early August. This surge is largely due to the unwinding of short positions and expectations of rising cooling demand across the Lower 48 states, which has attracted new buyers. Additionally, the market is being supported by the possibility of a rare summer storage draw, highlighting the impact of reduced production and steady demand.

Weather Forecast and Market Impact

Weather forecasts remain a critical factor in current market dynamics. NatGasWeather predicts moderate national demand over the next three days, with temperatures ranging from the 60s to 80s in the northern U.S. However, demand is expected to strengthen over the following 4-15 days as much of the interior U.S., particularly the Southwest deserts and Texas, experiences highs in the 80s to 100s. This anticipated rise in demand is contributing to a bullish outlook for natural gas prices.

Market Forecast

Given the tightening supply-demand balance and the forecasted increase in cooling demand, the short-term outlook for U.S. natural gas futures remains bullish. Traders should monitor weather-driven demand and potential global supply disruptions, especially from Russia, as these factors could further influence price movements.

Technical Analysis

Following the “old tops tend to make new bottoms” adage, buyers are defending the former top at $2.149. A sustained move over this level could drive prices back to this week’s high at $2.256, followed by another top at $2.315. This level is a potential trigger point for an acceleration into the downtrending 50-day moving average at $2.470.

On the downside, a failure at $2.149 could trigger a 50% retracement of the recent rally with $2.069 the primary target.