Natural Gas News: Market Struggles with Weak LNG Exports, Weather Analysis Shows Mild Demand

U.S. Natural Gas Futures Flat as Short-Covering Fades

U.S. natural gas futures traded nearly flat on Tuesday, giving up earlier gains after Monday’s strong rebound. The previous session had seen a potential bullish closing price reversal after futures tested a critical support level at $2.201. The rise in prices was attributed to short-covering and profit-taking following an extended bearish run, though the market remains hesitant to shift fully to a bullish outlook.

Despite Monday’s gains, natural gas remains under pressure from bearish fundamentals, including weak demand forecasts and sluggish liquefied natural gas (LNG) exports. Traders are watching the $2.201 support level closely; if this level breaks, prices could quickly fall to $1.883. On the upside, natural gas futures face resistance between $2.510 and $2.543, where sellers are expected to re-enter the market.

At 13:52 GMT, Natural Gas futures are trading $2.345, up $0.033 or +1.43%.

LNG Exports Drop Amid Maintenance Issues

Natural gas futures came under further pressure on Tuesday as U.S. LNG exports declined for a second consecutive day. Estimated feed gas flows to U.S. LNG terminals dropped to 11.8 billion cubic feet per day (Bcf/d), down 0.7 Bcf/d from Monday and 1.7 Bcf/d lower than Sunday, according to data from Wood Mackenzie. The dip in exports is primarily due to maintenance-induced restrictions at Cameron LNG in Louisiana, which has impacted its operations.

The weakness in LNG exports adds another bearish factor to the market, as exports typically provide key support for prices, especially during the shoulder season when domestic demand is lighter.

Weather Models Suggest Mild Demand

Weather forecasts continue to signal light demand for natural gas in the near term. According to NatGasWeather, while both the Global Forecast System (GFS) and European Centre (EC) models increased demand projections on Monday, overall national demand remains weak due to mild temperatures.

The current forecast from October 22-28 suggests cooler temperatures in the Northwest and Upper Midwest, with highs in the 40s-50s and lows in the 20s-30s. However, much of the rest of the U.S. will experience mild to warm conditions, with temperatures ranging from the 60s-80s, and locally hotter conditions in parts of the Southwest and Texas. Despite the added heating degree days (HDDs), the overall pattern remains bearish, reflecting light demand for natural gas as temperatures remain relatively mild across much of the U.S.

Market Forecast: Bearish Outlook Persists

The combination of weak LNG exports, ongoing maintenance at key terminals, and mild weather forecasts continues to weigh on natural gas prices. While Monday’s rebound was encouraging for bulls, it was likely driven by short-term profit-taking rather than a fundamental shift in market sentiment. Traders should expect resistance between $2.510 and $2.543, with any failure to hold support at $2.201 potentially leading to a quick decline toward $1.883. In the short term, the market outlook remains bearish.