Natural Gas News: Oversupply and LNG Export Disruptions Pressure Market

Natural Gas Futures Waver Amid Heat and Supply Issues

Natural gas futures fluctuated Friday as traders balanced upcoming severe heat against growing surpluses and the aftermath of Beryl in Texas. The market’s reaction underscores the complex interplay of factors influencing gas prices.

At 13:42 GMT, Natural Gas futures are trading $2.276, up $0.008 or +0.35%. This is up from an intraday low of $2.249.

Supply Outlook

The Energy Information Administration (EIA) reported a 65 Bcf injection for the week ending July 5, surpassing market expectations. Total working gas in storage reached 3,199 Bcf, 9.7% higher than last year and 18.7% above the five-year average. This robust supply situation continues to exert downward pressure on prices.

LNG Export Disruptions

U.S. LNG export terminals’ early cycle nominations for Friday were estimated at 11.4 Bcf/d, according to Wood Mackenzie. However, the Freeport LNG terminal in Texas remained offline for a sixth consecutive day following Beryl’s landfall. The facility’s continued shutdown due to power outages is impacting overall export capacity.

Weather Forecast

NatGasWeather predicts strong high pressure across most of the U.S. from July 12-18, with temperatures ranging from 90s to 100s. This heat wave is expected to drive substantial gas demand, except in the far northern U.S. where cooler temperatures will prevail. A cooling trend is anticipated in the Midwest and Northeast late next week.

Price Action

Despite the bullish weather outlook, natural gas prices closed lower for the third straight session on Thursday. The market has trended downward in 14 of the past 16 sessions, reflecting the market’s focus on ample supplies rather than potential demand spikes.

Market Forecast

The short-term outlook for natural gas appears bearish. While extreme heat typically boosts demand, the current oversupply situation and LNG export disruptions are likely to cap price gains. Traders should monitor the pace of inventory builds and the status of the Freeport LNG terminal for potential market shifts. However, unless there’s a significant change in the supply-demand balance, downward pressure on prices may persist in the near term.

Technical Analysis

All three trend indicators are pointing lower with natural gas well below the 50-day moving average at $2.733 and the 200-day moving average at $2.961. The former is controlling the intermediate trend, the latter controls the long-term trend.

The short-term trend is also down. It will change to up on a trade through $2.448.