Natural Gas News: US Prices Surge on Anticipated LNG Export Recovery

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Published: Jul 9, 2024, 13:22 GMT+00:00

Key Points:

NatGasWeather predicts dangerous heat across California, with temperatures soaring to 100-118°F in much of the state.
Bullish traders anticipate increased LNG demand as Hurricane Beryl's impact wanes, boosting natural gas prices.
US LNG exports to Asia and Europe reach parity, each receiving approximately 42% of total June shipments.

Natural Gas Prices Rise on Hot Weather Forecasts and LNG Demand

U.S. natural gas prices are climbing for a second consecutive session on Tuesday. This uptick is driven by short-covering and new buyers entering the market, anticipating increased demand due to hotter temperatures.

At 13:04 GMT, Natural Gas Futures are trading $2.415, up $0.049 or +2.07%.

Weather Outlook Boosts Demand Expectations

NatGasWeather forecasts hot high pressure dominating much of the western, southern, and eastern U.S. over the next several days. Highs are expected to range from the upper 80s to 110s Fahrenheit, with California facing particularly dangerous heat of 100-118°F across much of the state.

LNG Export Recovery

Bullish traders are also buying in anticipation of increased LNG demand as concerns about Hurricane Beryl subside. The storm, which made landfall in Texas as a Category 1 hurricane, has since weakened to a tropical storm. While it disrupted some LNG feed gas demand along the U.S. Gulf Coast, its impact is waning.

Export Facilities Resuming Operations

Freeport LNG Development LP shut down its export facility ahead of Beryl’s arrival, cutting feed gas demand from 1.6 Bcf/d to nearly zero. The facility is expected to resume operations when deemed safe. Other LNG plants, including Cheniere Energy’s Corpus Christi facility and Cameron LNG, also underwent maintenance in June, contributing to a slight decline in overall exports.

Export Trends

U.S. LNG exports fell slightly in June to 7.11 million metric tons from 7.60 MT in May. However, exporters boosted shipments to Asia, where prices were higher, putting Asian exports on par with those to Europe. Each continent received approximately 42% of total U.S. LNG exports in June.

Market Forecast

The current rally in natural gas prices is expected to be limited, with strong resistance anticipated at $2.652. While hot weather forecasts and recovering LNG demand provide support, concerns about increased production are tempering bullish sentiment. Traders should monitor weather patterns, LNG export levels, and domestic production for short-term price direction.

Technical Analysis

Daily Natural Gas

The natural gas futures market is showing signs of a short-term rebound on Tuesday, following a pattern called a “closing price reversal bottom” that was confirmed on Monday. This doesn’t signify a full trend reversal, but rather suggests the market is correcting from oversold conditions and responding to changing fundamentals.

The daily chart indicates potential for upward movement, with a key target at $2.652, which represents a 50% retracement level. This price point is likely to attract sellers, potentially limiting further gains.

It’s important to note that this upward movement is likely a temporary adjustment rather than a long-term trend change. The market is essentially balancing itself after a period of decline, influenced by short-term factors and technical trading patterns.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.