Natural Gas News: Prices Rise Today on Cooler Weather, But Bearish Market Remains

U.S. Natural Gas Futures Edge Higher on Cooler Weather Forecasts

U.S. natural gas futures climbed on Tuesday as traders closed short positions, anticipating cooler weather and increased heating demand in the Midwest and Northeast. Despite the recent gains, the broader market trend remains bearish, with futures trading below the 50-day moving average of $2.559. This technical level has been pivotal in setting the intermediate market direction.

The main trading range of $2.201 to $3.019 highlights a critical retracement zone between $2.610 and $2.510. This area will play a significant role in determining near-term price action, as traders monitor these levels for potential breaks or rebounds.

At 14:05 GMT, Natural Gas is trading $2.499, up $0.005 or +0.20%.

Cold Weather Supports Near-Term Demand

Natural gas futures saw a modest lift early Tuesday, as an early-season cold front brought increased heating demand to large parts of the country. Analysts have noted that while the overall market remains cautious, the near-term cold spell has provided some support. The November contract dropped 13.8 cents during Monday’s Columbus Day holiday session, pushing it below the key $2.50 level for the first time since August.

According to EBW Analytics, cooler temperatures across the Midwest and Northeast this week are expected to drive strong national demand. However, milder weather in Texas and the southern U.S. is expected to temper this, leading to weaker demand in the coming weeks as temperatures moderate.

Weather Forecast: Mixed Signals for Demand

The NatGasWeather forecast for October 15-21 indicates moderate to high demand for the first half of the week, driven by chilly temperatures in the Midwest and Northeast, with highs in the 40s and 50s and lows dipping into the 20s and 30s. Yet, demand is expected to ease by the end of the week as the southern U.S. experiences more comfortable temperatures in the 70s and 80s. This balancing act between strong demand in the north and weaker demand in the south is expected to limit upside momentum in the short term.

LNG Exports: A Key Driver of Future Demand

Looking ahead, U.S. natural gas exports, particularly liquefied natural gas (LNG), are expected to be a key driver of demand. The Energy Information Administration (EIA) projects that U.S. LNG exports will rise from 12.1 billion cubic feet per day (Bcf/d) in 2024 to 13.8 Bcf/d in 2025. This increase in export capacity, coupled with flat domestic consumption, is expected to support higher prices in the long term.

Several new LNG export facilities are scheduled to come online by the end of 2024, including the Plaquemines LNG and Corpus Christi LNG Stage 3 projects. These developments are expected to further boost U.S. natural gas exports, with Plaquemines LNG ramping up its Phase 1 operations by spring 2025 and Phase 2 by the end of 2025.

Market Outlook: Neutral to Bearish

While cooler weather in the short term may support natural gas prices, the overall market remains under pressure. Futures remain below key technical levels, and mild weather in the southern U.S. is expected to cap demand. The longer-term outlook, however, is more favorable due to rising LNG exports, which could support a gradual price increase in 2025. For now, traders should maintain a cautious outlook, with near-term resistance at $2.510 and a potential bearish trend if prices fail to hold these levels.