Natural Gas News: Volatility Ahead as Supply/Demand Battle Heats Up

Natural Gas Futures Rise as Traders Seek to Recover Losses

U.S. natural gas futures are trading higher on Tuesday as traders attempt to recoup losses from the previous session. Monday saw a potentially bearish reversal after failing to surpass the May 23 peak of $3.159. Despite early weakness today, the market remains above the 200-day moving average at $2.948, a critical indicator of buyer strength.

At 12:31 GMT, Natural Gas futures are trading $3.008, up $0.102 or +3.51%.

NatGasWeather Forecast

June 11-17: A hot ridge will dominate California to Texas with temperatures in the 90s-100s, while the Midwest to Northeast remains comfortable with highs in the upper 60s to lower 80s. Nationwide, temperatures are expected to rise above normal late this weekend into next week, with highs in the mid-80s to low 90s in the northern U.S. and 90s-100s in the southern U.S. Overall, demand is projected to be low to moderate through Thursday, then increasing to high.

Monday’s Recap

Natural gas futures exceeded $3 on Monday before retreating as record-high June forecasts were overshadowed by production concerns. Futures rose over 5% but fell back after the Mountain Valley Pipeline announced the completion of its project and pending approval from the U.S. Federal Energy Regulatory Commission (FERC) to begin service.

European Storage Levels

Europe is on track to refill its natural gas storage ahead of the winter season, aided by a surge in liquefied natural gas (LNG) imports that compensate for reduced Russian pipeline supplies. Currently, storage facilities are 71% full, significantly above the five-year average of 59%. Goldman Sachs projects inventories will reach the mid-90% range by the end of October.

Supply and Demand Factors

In the U.S., natural gas output in the Lower 48 states has slightly decreased to an average of 98.0 billion cubic feet per day (bcfd) in June, down from May’s 98.1 bcfd. Despite a decline to a three-week low of 97.2 bcfd on Monday, output is recovering from a 15-week low of 96.5 bcfd on May 1. This increase indicates producers are ramping up production following a significant price surge in April and May.

LSEG forecasts gas demand in the Lower 48 will rise from 95.1 bcfd this week to 99.2 bcfd next week. Gas flows to major U.S. LNG export plants have increased to 13.1 bcfd in June, up from 12.9 bcfd in May, despite ongoing maintenance at several facilities.

Market Forecast

Given the combination of rising temperatures and potential supply increases, natural gas futures are expected to face resistance at higher levels. If the market remains above the 200-day moving average, a bullish outlook may prevail. However, production upticks and pipeline developments could cap significant gains, maintaining a balanced market in the near term.

Technical Analysis