Natural Gas Price Fundamental Weekly Forecast – LNG, Heating Demand Creating Bullish Conditions

Natural gas futures jumped last week as production fell to its lowest in over two years after Gulf Coast energy firms shut wells ahead of Hurricane Delta and on forecasts for colder weather and higher demand in mid-October.

That price increase came despite a drop in gas flows to liquefied natural gas (LNG) export plants as operators either shut or reduced their Louisiana facilities before Delta makes landfall. According to reports, Delta slammed into Southwest Louisiana near the Cameron LNG export plant.

Last week, December natural gas settled at $3.204, up $0.213 or +7.12%.

US Energy Information Administration Weekly Storage Report

The U.S. EIA reported Thursday that domestic supplies of natural gas rose by 75 billion cubic feet for the week-ended October 2. On average, analysts polled by S&P Global Platts forecast an increase of 71 billion cubic feet. Total stocks now stand at 3.831 trillion cubic feet, up 444 billion cubic feet from a year ago, and 394 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for October 12 to October 18, “Three weather systems will impact the U.S. to open the week with one over the Northwest, a second over the Midwest, and a third over the Mid-Atlantic. Each will bring showers and highs of 40s to 60s, coolest across the Northern Plains. The rest of the U.S. will be comfortable to warm with highs of 70s and 80s besides the hotter Southwest with 90s. A stronger cold shot will push into the Midwest late this week into next weekend with rain, locally snow, and chilly lows of teens to 40s for stronger national demand. Overall, national demand will be low through Thursday, then increasing to high.”

Weekly Forecast

On Sunday, NatGasWeather issued a special report saying, “Hurricane Delta made landfall into Louisiana Friday, including a direct hit to the Cameron LNG facility, but only a glancing blow to Sabine Pass. Sabine Pass shows feedgas for today (Sunday), while Cameron is offline.

If Sabine Pass shows feedgas again for Monday that would be bullish in the sense that it implies it didn’t occur much damage. How long Cameron stays offline, of course, will be closely watched.”

The combination of feedgas demand and the return of colder temperatures later in the month will be bullish for natural gas because it will help alleviate storage issues before the winter heating season officially begins.

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