Natural Gas Prices Forecast: Futures Heat Up Amid Looming Australia Strikes

Highlights

• Natural gas futures surge due to potential Australian strike, affecting global supply.
• US temperatures spike, indicating higher national natural gas demand in the coming week.
• Key Australian LNG facilities teeter on the edge of major supply disruptions.

Natural Gas Demand Rises Amid Looming Australian Strike

Natural gas futures are exhibiting a significant surge as speculations grow over an impending strike in Australia’s gas facilities, potentially affecting global supply. The anticipation of this industrial action is heightening concerns as it intertwines with an already heightened demand forecasted due to climatic factors in the US.

US Weather Spurs High National Demand

The upcoming hot temperatures, especially from Sunday to Tuesday, where temperatures are expected to range in the 90s-100s, signify increased natural gas demand. Concurrently, the merger of a weather system with a tropical system heading into Baja is predicted to bring showers to the Great Lakes & Northeast region by mid-week. This combination prompts a surge in national demand, emphasizing the need for steady supply.

Australian LNG Facilities: A Potential Chokepoint

The looming industrial actions at key Australian liquefied natural gas (LNG) facilities could significantly disrupt the supply chain. Workers at Woodside Energy Group’s North West Shelf offshore gas platforms have shown intentions to strike, and similar sentiments are emerging from workers at Chevron’s Wheatstone and Gorgon LNG ventures. With these facilities responsible for approximately 10% of the global LNG supply, any halt could reverberate across the global market.

Balancing Act: Unions vs. LNG Companies

Both unions and LNG companies are currently in a delicate negotiation phase. While unions aim to push the companies to meet their demands without hampering long-term investments or Australia’s reputation as a reliable LNG supplier, the companies are cautious not to seem overly yielding. Nonetheless, the most probable outcome foreseen is limited industrial action, ensuring negotiations continue and a mutually beneficial settlement emerges.

Short-Term Forecast: Bullish on LNG Prices

The ongoing union disputes, combined with an increase in Asian LNG demand, have contributed to a spike in LNG spot prices, marking the highest in five months. As northern winter approaches, demand in Asia is anticipated to grow further. Simultaneously, Europe’s dwindling demand, due to high storage levels and reduced pipeline supplies, could further accentuate supply concerns, solidifying a bullish outlook for LNG in the near future.

Technical Analysis

The current 4-hour price of Natural Gas is 2.635, which, while slightly below the previous close of 2.643, is still holding well above the main support area of 2.542 to 2.487. This shows resilience in the price, suggesting that buyers are stepping in around these levels. Moreover, the 14-4H RSI stands at 48.91, which is just below the neutral 50 mark. This proximity to the neutral zone indicates that while momentum might be weak, it hasn’t reached an extreme bearish level.

The price’s closeness to the 200-4H moving average of 2.661 also offers a potential area for an upward reversal. Considering these factors, there’s a modest bullish opportunity if the price can capitalize on these supports and reverse its short-term downtrend.