Natural Gas Price Fundamental Daily Forecast – Drop in LNG Exports Could Become Big Worry for Long Speculators

Natural gas futures are trading lower on Thursday while continuing to straddle a key support area that could determine its near-term direction. The market is also trading inside yesterday’s range, which suggests investor indecision and impending volatility.

The lack of cold temperatures has been the main reason for the recent drop in prices, but bullish speculators face another issue that could wipe out most of the gains seen since late December. Demand could be dropping for liquefied natural gas (LNG) after a report showed a drop in export volumes.

At 14:37 GMT, March natural gas futures are trading $2.498, down $0.035 or -1.38%.

Short-Term Weather Outlook

According to NatGasWeather.com for January 21 to January 27, “Cool to cold conditions will spread across the northern U.S. the next few days with highs of 20s to lower 40s for stronger national demand. The West will be cool and unsettled with areas of rain and snow and highs of 20s to 50s. The central and southern U.S. will be mild to warm with highs of 40s to 70s for light demand. After a brief break Monday across the Midwest and East, another chilly cold shot will arrive mid-next week with lows of 0s to 30s for a return to strong national demand. Overall, low demand today, then increasing to high by Saturday.”

Maxar’s Weather Desk Observations

In its latest forecast, Maxar’s Weather Desk observed “warm detail changes” in the Midcontinent for the 11-15 day time frame (January 31-February 4) compared to expectations 24 hours prior.

In the six-to-10-day time frame, from next Tuesday through January 30, Maxar said its latest forecast trended colder in the East, West and Texas but warmer in the Midwest and South.

Drop in LNG Exports

The latest estimates from Wood Mackenzie early Thursday showed a sizeable 730 MMcf/d day/day decline in LNG feed gas demand, with total volumes down to 8.93 Bcf/d based on evening cycle nominations.

Daily Forecast

Looking ahead to Friday’s government storage report, Natural Gas Intelligence’s model is predicting a 191 Bcf withdrawal for the week-ending January 15. That’s higher than the five-year average withdrawal of 167 Bcf.

The daily chart shows the market will strengthen on a sustained move over $2.552 with a potential short-term target of $2.647 to $2.691. A sustained move under $2.485 will signal the presence of sellers. This could trigger an acceleration to the downside with $2.268 a potential target.

For a look at all of today’s economic events, check out our economic calendar.