Natural Gas News: Futures Rise as Traders Weigh Hurricane Impact and Supply Risks Today

U.S. Natural Gas Futures Edge Higher Amid Hurricane Concerns

U.S. natural gas futures are trending higher on Monday as traders respond to conflicting weather reports and the potential impact of Hurricane Francine. After dipping to $2.158 earlier in the session, prices have recovered as the market weighs the effects of a possible hurricane in the Gulf of Mexico. The uncertainty revolves around whether the storm will disrupt production, pushing prices higher, or reduce demand by causing power outages and cooler temperatures.

At 12:02 GMT, Natural Gas futures are trading $2.238, up $0.068 or +3.13%.

Hurricane Risks Weigh on the Market

The market has been volatile following the recent rally to $2.294 on Friday, as traders grapple with the potential effects of the hurricane. Analysts, including Eli Rubin of EBW Analytics, warn that Hurricane Francine could reduce demand, particularly in affected areas where cooler temperatures and power outages are expected. However, a disruption in production remains a bullish scenario that could push prices up. The market is moving cautiously as traders position themselves ahead of the storm’s uncertain path.

Supply Pressures and High Storage Levels

Despite the potential hurricane threat, natural gas futures are facing resistance from high storage levels and steady production. The U.S. Energy Information Administration (EIA) reported an injection of 13 billion cubic feet (Bcf) into storage for the week ending August 30, bringing the total to 3,347 Bcf. This figure exceeds last year’s levels by 208 Bcf and is 323 Bcf above the five-year average, creating a supply overhang that has limited any significant upward movement in prices. Additionally, U.S. production remains near 101 Bcf per day, keeping supply pressures intact.

Moderate Demand Limits Upside Potential

National demand for natural gas is expected to remain moderate for the week of September 9-15, with temperatures in the northern U.S. forecasted to be in the 60s to 80s. Meanwhile, the southern regions and parts of the West will see highs in the mid-80s to 100s. However, tropical rains in Texas and Louisiana could lead to power outages, further reducing demand. According to NatGasWeather, cooler temperatures and the impact of the hurricane are likely to put bearish pressure on the market, unless a significant drop in production occurs.

Market Forecast: Cautiously Bearish

The short-term outlook for U.S. natural gas futures remains cautiously bearish. Key resistance is currently at $2.252, and failure to break above this level signals the continued presence of sellers in the market.

A break below $2.158 could trigger a test of $2.021, a key support level. Conversely, a sustained move over $2.252 may lead to a challenge of the 50-day moving average, which is currently at $2.326.

If prices break above the 50-day moving average, it could accelerate gains, with $2.482 being the next major target. However, oversupply and moderate demand are likely to keep upward momentum in check, at least in the near term.