Natural Gas News: Futures Prices Steady as Heatwave Looms

Natural Gas Futures Steady Amid Mixed Signals

Natural gas futures are holding steady as traders weigh various factors influencing the market. Recent developments in weather patterns, LNG exports, and production trends are shaping the near-term outlook for traders.

At 13:26 GMT, Natural Gas Futures are trading $2.334, down $0.010 or -0.43%.

Current Market Performance

As of Wednesday, natural gas futures are trading nearly flat, confined within a two-day range of $2.268 to $2.448. The pivot point at $2.358 appears to be controlling price action, suggesting a market in search of clear direction.

Weather Driving Demand Expectations

NatGasWeather forecasts intense heat across much of the western, southern, and eastern United States in the coming days. Temperatures are expected to range from the upper 80s to 110s Fahrenheit, with California facing particularly severe conditions of 100-118°F. This hot weather is likely to boost cooling demand and support natural gas prices.

LNG Export Recovery in Focus

The market is anticipating a rebound in LNG demand as the impact of Hurricane Beryl subsides. While the storm caused some disruptions, including the temporary shutdown of Freeport LNG Development LP’s export facility, operations are expected to resume soon. U.S. LNG exports dipped slightly in June to 7.11 million metric tons from 7.60 MT in May, but exporters increased shipments to Asia, where prices were more attractive.

Supply and Storage Considerations

Despite recent bullish factors, the rally in natural gas prices may face limitations. Strong resistance is anticipated at $2.652. The U.S. Energy Information Administration (EIA) reports that natural gas inventories at the end of June were 19% above the five-year average, which could put downward pressure on prices.

Market Outlook: Cautiously Bullish

The EIA projects a significant increase in Henry Hub natural gas spot prices for the latter half of 2024, forecasting an average price of $2.90/MMBtu for the final six months of 2024, up 80 cents from the first half of the year. This bullish outlook is based on expectations of relatively flat production and increased seasonal demand from the electric power sector.

However, the current range-bound trading suggests traders are cautious. Market participants should closely monitor weather patterns, LNG export levels, and domestic production, as these factors will be crucial in determining price direction in the coming weeks.

Technical Analysis

U.S. natural gas prices are higher for the week, but nearly flat on Wednesday, leading to a rangebound trade. Optimistic traders are trying to build on Monday’s potentially bullish closing price reversal chart pattern, but new buyers have been scarce.

There is not much we can do with this formation other than wait for a breakout move. The longer it stays in a range, the greater the odds of a volatile move. This week’s high at $2.331 could be a triggerpoint for an upside breakout. The chart indicates that $2.652 is a potential target, but the fundamentals say gains could be limited.

On the downside, $2.251 remains strong support.