Natural Gas News: Hurricane Debby Impacting Futures, Inventory Levels, and Market Forecast

Natural Gas Futures Stabilize Amid Hurricane and Weather Uncertainties

Natural gas futures are showing a modest increase on Tuesday after successfully testing the key support level at $1.907. Traders remain cautious as they monitor the aftermath of Hurricane Debby and mixed weather forecasts affecting cooling demand in the Southeast.

At 13:14 GMT, Natural Gas Futures are trading $1.989, up $0.047 or +2.42%.

Early Tuesday, natural gas futures remained within a narrow trading range. The focus was on the former Hurricane Debby and the impact of contrasting weather patterns. While the southern and western regions of the United States continue to experience intense heat, the National Weather Service (NWS) forecasts cooler temperatures in the Northern Plains through the Great Lakes, with highs ranging from the upper 60s to 70s. These cooler conditions are expected to persist into next week, potentially moderating overall demand.

Canadian Natural Resources Shifts Focus Amid Low Prices

Canadian Natural Resources Ltd. has announced a strategic slowdown in natural gas production due to current low prices. In its second-quarter earnings report, the Calgary-based firm stated it would shift some natural gas development activities to higher return multilateral heavy oil wells. The company plans to drill and complete approximately 20 natural gas wells in 2024 but will curtail their production until market conditions improve. This decision reflects a cautious approach to managing supply amidst weak pricing in the first half of 2024.

Natural Gas Futures Capped as Hurricane Debby Threatens Demand Destruction in Southeast

On Monday, natural gas futures saw a decline as Hurricane Debby made landfall in western Florida as a Category 1 storm. The hurricane brought powerful winds and heavy rains, which could lead to significant power outages and reduce cooling demand. The National Hurricane Center (NHC) forecasted that Debby would deliver up to 30 inches of rain, impacting Georgia and the Carolinas. Coupled with the storm’s effects, cooler northern weather and robust storage levels contributed to the market’s bearish sentiment. While traders try to establish support near $1.907, prices are being capped by the uncertainty surrounding the hurricane.

Weather Forecast and Market Demand

According to NatGasWeather, high pressure will dominate most of the U.S., bringing temperatures in the 90s to 100s and driving very strong national demand. However, cooler temperatures are expected in the Midwest and New England, with highs in the upper 60s to lower 80s. The Southeast, impacted by Debby, will experience more comfortable weather with highs in the 80s. This pattern will result in moderate to high national demand today, easing to moderate levels by mid-week as the Midwest, Plains, Ohio Valley, and Northeast cool down.

Market Forecast

Given the mixed weather forecasts and the impact of Hurricane Debby, the outlook for natural gas futures remains cautiously bearish in the short term. The expected cooler temperatures in significant regions and the curtailment of production by Canadian Natural Resources Ltd. suggest that supply will remain ample, potentially capping any significant price increases. Traders should stay alert to evolving weather patterns and production adjustments for future market cues.

Technical Analysis

Traders may be trying to build a support base at $1.907, the last major support level before $1.481. Given the supply glut, it’s going to take a major jump in LNG demand or the curtailment of production to fuel a rebound rally.

The first upside target today is a minor pivot at $2.025. The next is $2.149. Taking out this level is likely to fuel a strong short-covering rally with $2.315 a major target.