Natural Gas Prices Forecast: Demand Shifts Amid Cooler Forecasts

Highlights

• U.S. nat gas futures rebound from a decline, influenced by mild weather.
• September’s U.S. gas output saw a minor dip to 102.2 bcfd, just below August’s 102.3 bcfd.
• Rising LNG exports contrast with decreasing demand predictions for upcoming weeks.
• Bearish sentiment prevails; the natural gas market closely eyes global events and weather.

US Natural Gas Dynamics

U.S. natural gas futures experienced a minor surge on Monday, rebounding from an initial decline influenced by mild weather conditions and neutral weekend developments. While current temperate conditions are tempering prices, lingering strikes in Australia have yet to make a tangible impact. In contrast, futures dropped by 1% on Friday, reflecting fewer production reductions than anticipated and milder weather predictions for the upcoming week.

Production and Demand Trends

The U.S. has witnessed a slight decline in gas output for September, averaging at 102.2 billion cubic feet per day (bcfd) compared to August’s record 102.3 bcfd. This drop is smaller than initial projections, with daily output anticipated to decline by about 2.0 bcfd.

As for demand, forecasts for the upcoming weeks hint at a decrease, despite a surge in LNG exports. For instance, gas flows to prominent U.S. LNG export facilities averaged 12.7 bcfd in September, a rise from August’s 12.3 bcfd. The Freeport LNG facility, in particular, has seen notable activity, drawing in more gas following a mysterious intake reduction.

Australia’s LNG Operations

The Wheatstone LNG facility in Australia, owned by Chevron, is back at full production following a strike-induced reduction. Both the Wheatstone and nearby Gorgon facilities contribute to over 5% of the global LNG supply. Despite the recent fault, production rates maintained around 80% of the usual output, with no disruptions to the scheduled deliveries. Yet, labor disputes continue, and further mediation sessions between Chevron and unions are anticipated.

Short-Term Forecast

For the short-term, the natural gas market sentiment is somewhat bearish. Cooler weather forecasts are likely to exert the most influence on the market’s trajectory. While ongoing discussions surrounding production and labor disputes in significant LNG facilities in Australia are likely to have a limited effect until they turn into prolonged events. Market participants will be closely watching for any sudden changes in demand, supply, or geopolitical factors that could tilt the scales.

Technical Analysis

The current 4-hour price of Natural Gas stands at 2.634, which is below the 50-4H moving average of 2.638 and slightly beneath the 200-4H moving average of 2.654. This suggests a potential bearish crossover. The 14-4H RSI reading of 42.03 indicates slightly weakened momentum but is not in the oversold territory yet.

The price currently hovers above the main support area of 2.542 to 2.487 and below the main resistance range of 2.803 to 2.865. Given this data, the market sentiment for Natural Gas in the short-term leans bearish, with the price experiencing resistance from both key moving averages and nearing the primary support zone.