Natural Gas Price Fundamental Daily Forecast – Traders Assessing Freeport LNG Partial Restart News

Natural gas futures are drifting lower on Wednesday, continuing a decline on less demand for heating and rising production and storage. The U.S. gas futures contract is down by more than 50% this year.

At 12:30 GMT, April natural gas futures are trading $2.170, down $0.007 or -0.32%. On Tuesday, the United States Natural Gas Fund ETF (UNG) settled at $7.21, down $0.55 or -7.15%.

Freeport LNG Gets US Approval for Partial Restart

There is some potentially good news for bullish traders although it’s not having an immediate impact on prices. Freeport LNG, the second largest U.S. liquefied natural gas exporter, said on Tuesday that federal regulators had approved it to partially restart commercial operations at its Texas plant after an outage that lasted more than eight months.

The U.S. Federal Energy Regulatory Commission (FERC) approved the partial restart of two of the three gas-liquefaction units, two storage tanks, and a single tanker berth, a filing showed on Tuesday. Restart of the third unit and related facilities require additional permission, FERC said.

But it may take some time before the impact of the move actually has a positive effect on prices. The restart may not fuel a rally, but it could at least bring an end to the relentless selling pressure.

It will be “several weeks” before the plant can reach full processing capacity of 2 billion cubic feet per day, Reuters reported. A third storage tank and second tanker berth will not be available until May, Freeport LNG said in a statement.

Short-Term Weather Outlook

According to NatGasWeather for Feb. 22-28, “A stormy pattern will impact the western and northern US with areas of rain and snow, while cool to cold with low of -0s to 30s.

Texas, the South, and much of the East will be under high pressure with very nice highs of 60s to 80s for light demand.

Frigid air over the Midwest will spread across the Ohio Valley and Northeast Friday-Saturday with areas of snow and lows of -0s to 30s for strong national demand, then warming Sunday – Tuesday for a return to light demand.

Looking Ahead…

Thursday’s Energy Information Administration (EIA) storage report is likely to see a growing storage cushion due to unseasonably light winter withdrawals.

EBW Analytics Group analyst Eli Rubin said, “Fundamentally, the gas market still needs to clear another pair of extraordinary bearish EIA reports before the storage flattens.”

Finally, look for volatility to return with the upcoming options expiration and final settlement of the March contract later this week.