Natural Gas Price Fundamental Daily Forecast – Sharply Higher on Increased LNG Demand

Natural gas futures are trading sharply higher on Monday, in a move that suggests the weather conditions over the weekend may have shifted to the cooler side. This follows the 3% drop on Friday that was fueled by forecasts calling for mild weather and low heating demand through mid-November.

At 12:28 GMT, December natural gas futures are trading $6.302, up $0.618 or +10.87%. On Friday, the United States Natural Gas Fund ETF (UNG) settled at $18.70, down $0.21 or -1.11%.

Traders could also be reacting to the news of the return to service from maintenance of Berkshire Hathaway Energy’s 0.8 billion cubic feet per day (bcfd) Cove Point liquefied natural gas (LNG) export plant in Maryland. This event is expected to boost U.S. demand for gas for exports.

Traders are also monitoring the events surrounding the return of Freeport LNG’s export plant in Texas. Freeport has said it expects the facility to return to at least partial service in early- to mid-November following an unexpected shutdown on June 8 due to a pipeline explosion.

Refinitiv Supply/Demand Outlook

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.5 bcfd so far in October, up from a monthly record of 99.4 in September.

Meanwhile with the coming of seasonally cooler weather, Refinitiv projected average U.S. gas demand, including exports, would rise from 94.3 bcfd this week to 97.0 bcfd next week and 101.6 bcfd in two weeks. The forecast for this week jumped due to the expected rise in LNG exports with the return of Cove Point.

Short-Term Weather Forecast

According to NatGasWeather for October 31 to November 3, “The southern and eastern U.S. will be comfortable with highs of 60s to 80s, while the West & Plains remain cool as weather systems track through with rain, snow, and highs of 40s to 60s.

National demand is expected to be very light this week with the Eastern 2/3 of the U.S. warmer than normal, while the West remains cool.

Daily Forecast

Keep an eye on U.S. LNG exports this week as Cove Point returns to service. This could give natural gas a much needed boost throughout the week.

The average amount of gas flowing to U.S. LNG export plants fell to 11.2 bcfd in October due to the Cove Point outage, down from 11.5 bcfd in September and well below the monthly record of 12.9 bcfd in March.

This figure could jump this week, giving natural gas a much needed boost. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG so there is plenty of room for improvement.