Natural Gas News: Futures Rally as Bullish Storage Data and Hurricane Francine Shake Market

Natural Gas Futures Rally on Bullish Storage Data and Hurricane Francine Impacts

U.S. natural gas futures saw a moderate increase on Friday, surpassing the 50-day moving average of $2.306, as bullish sentiment gained momentum. The shift, driven by tightening supply trends and the impact of Hurricane Francine, has set price targets at $2.482 and $2.757. The storm’s disruption of production, alongside supportive government storage data, has pushed natural gas prices higher, with traders eyeing potential continued gains.

At 12:05 GMT, Natural Gas futures are trading $2.369, up $0.012 or +0.51%.

Impact of Hurricane Francine

Hurricane Francine made landfall as a Category 2 storm on Thursday, bringing fierce winds that caused power outages and disrupted liquefied natural gas (LNG) activity, primarily in the Gulf Coast. The storm also hindered production across key regions, tightening supply. Temperatures dropped in affected areas, temporarily reducing demand but contributing to market volatility. The overall disruption in both supply and demand due to Francine has contributed to the bullish sentiment in the market, providing further support to natural gas futures.

Weekly Natural Gas Storage Report

According to the latest U.S. Energy Information Administration (EIA) report, working gas in storage increased by 40 billion cubic feet (Bcf) for the week ending September 6, 2024. This brought total storage to 3,387 Bcf, which is 198 Bcf higher than last year and 296 Bcf above the five-year average of 3,091 Bcf. While the reported build was lower than expectations of 46-50 Bcf, it still reflected tightening supply, particularly as the figure came in below the five-year average build of 67 Bcf. This unexpected storage miss provided additional bullish fuel for the market.

Pre-Report Expectations and Analysis

Market expectations ahead of the report indicated a build of around 47 Bcf. The actual increase of 40 Bcf fell short of these forecasts, reinforcing the notion of a tighter supply environment. A cooler-than-normal central U.S. and hotter-than-normal conditions in the West and East contributed to varied demand levels, but overall, the lower-than-expected build in storage suggests that supply is not keeping pace with potential demand.

NatGasWeather Forecast and Market Demand

Looking ahead, weather patterns are expected to play a crucial role in determining short-term demand. From September 12 to 18, warm-to-hot conditions are forecasted for the Southwest and central U.S., with temperatures in the 90s and 100s. In contrast, cooler weather will prevail in the Pacific Northwest and Mountain West, with highs in the 60s and 70s. The East will experience milder weather, but heavy rainfall from Tropical Cyclone Francine is expected to moderate demand slightly. Overall, moderate national demand is forecast for the next week, limiting extreme price fluctuations.

Market Forecast

Given the bullish storage report, reduced supply due to hurricane disruptions, and supportive technical indicators, the near-term outlook for natural gas futures appears bullish. Prices are expected to continue testing higher resistance levels, with $2.482 and $2.757 as key targets. However, any shift in weather patterns or unexpected changes in production could influence future price movements. Traders should closely monitor upcoming storage reports and weather forecasts to assess further market direction.