Natural Gas Price Fundamental Daily Forecast – Struggling with Unseasonably Mild Temps, Rising Production

Natural gas futures retreated on Friday as cash market prices fell amid a delay to the start of winter. Traders have been waiting for the return of cold weather to drive up demand, but instead have been met with unseasonably mild temperatures and light heating demand in heavily populated areas.

On Friday, January natural gas futures settled at $4.880, down $0.365 or -6.96%.

Natural Gas Intelligence’s (NGI) Weekly Spot Gas National Average for the November 8-12 period dropped 59.5 cents to $4.690.

Additionally, January natural gas futures had a hard time generating any upside momentum last week as bullish traders struggled with the unusually warm weather outlooks, rising production and another November injection of natural gas into government storage facilities.

‘Any Cold Weather Not Likely to Last’ ~ NatGasWeather

Forecasters anticipated stronger demand early in the week ahead, with cold air in the Midwest spreading into the East over the weekend, though it was not likely to last long, NatGasWeather said.

“National demand will drop to light levels mid-week due to a warm break across the southern and eastern U.S.,” the forecaster said. “Demand will return to seasonal levels November 19-21 as a cool shot sweeps across the Midwest with lows of 10s to 30s. However, a swing back to lighter demand is possible around November 23-25 and where the pattern is again not cold enough.”

Rising Production Puts Downward Pressure on Futures

NGI wrote the bearish mid-range weather forecasts converged with rising production levels to put downward pressure on futures. Output hovered around 95 Bcf/d during the week – near the 2021 high-water mark – leaving markets to mull the specter of tightening supply/demand balances with widespread winter weather not yet in the offing.

More Gas Coming from Russia

Russia during the week pledged to ramp up pipeline exports to Europe to help meet strong pre-winter demand on the continent, according to NGI. U.S. exports of liquefied natural gas (LNG) have held strong in large part because of European demand. But Russian supplies, if they prove steady, could curb Europe’s need for U.S. gas this winter, adding a bearish element to NYMEX futures trading and pressuring Dutch Title Transfer Facility (TTF) prices as well in recent sessions.

If physical flows from Russia “ramp higher, further losses for Dutch TTF futures – and possible downward pressure for NYMEX natural gas – are likely,” EBW Analytics Group said.

Short-Term Outlook

“This time of year it’s all about the weather, and we need to see more cold before these prices can move up and sustain momentum,” Thomas Saal, senior vice president of energy at Stone Financial Inc., told NGI.

“We need to see more convincing demand in the forecasts,” Saal said.