Natural Gas Prices Forecast: Futures Reflect Weather Uncertainties and Export Shifts

Highlights

• Mild October weather forecasts influence the natural gas market sentiment.
• A decrease in U.S. LNG exports observed, affecting the gas market.
• October futures traders shift focus to November contracts.
• Weather projections highlight mild U.S. conditions, reducing gas demand.

U.S. Natural Gas Futures Respond to Mild October Forecasts

U.S. natural gas futures are showing an uptick today, following a 1% dip the previous day. This fluctuation is influenced by forecasts predicting milder weather conditions throughout mid-October and a decrease in gas flow to U.S. LNG export facilities. Additionally, there’s a transition in play as traders shift from the October to November futures contracts. A simultaneous rise in crude oil prices seems to be supporting the overall energy sector.

Weather Predictions Influence Gas Demands

In the coming weeks, the weather across the U.S. is expected to be temperate, with the southern regions experiencing highs of 80s to 90s. The rest of the country will enjoy 60s to 80s, except for the stormy Northwest which may see cooler 50s. The Western U.S. will face rainy conditions with 50s-60s temperatures over the weekend. Given this, there’s anticipated low national gas demand for the next week.

Drop in Average Gas Output

Financial powerhouse LSEG highlighted that the average gas production in the U.S. lower 48 states for September is at 102.1 billion cubic feet per day (bcfd), slightly down from August’s record of 102.3 bcfd. Daily figures are projected to decline by 1.7 bcfd, the largest one-day drop since early August.

LNG and Pipeline Exports on the Rise

Despite the daily fluctuations, LNG exports and pipeline activities are set to climb. LSEG predicts that U.S. gas demand, including exports, will marginally increase from 94.5 bcfd this week to 94.8 bcfd in the next. This aligns with their Monday outlook.

Short-Term Forecast

The natural gas market exhibits mixed sentiment. While milder weather conditions hint at reduced demand, rising LNG exports could balance the scales. Traders should approach with calculated optimism.

Technical Analysis

Natural Gas Futures show a mixed sentiment. The current daily price of 2.920 sits above both the 200-4-Hour and 50–4-Hour moving averages, indicating a prevailing bullish sentiment.

The 50-4-Hour moving average, being slightly higher than the 200-4-Hour, may suggest a recent momentum shift favoring the bulls. The 14-Hour RSI stands at 74.80, indicating an overbought scenario, which often precedes a potential pullback or consolidation.

Though there’s a minor resistance at 3.002 that the market might test, the absence of a main resistance level leaves room for upward exploration.

On the flip side, the minor support at 2.863 could play a pivotal role if there’s a correction. Given the RSI and price position relative to moving averages, investors should proceed with caution, despite the current bullish undertone.

Traders should also be aware that trading the rollover from October to November futures can produced skewed technical results, which is why it is usually traded by professionals. Furthermore, the rollover is often the source of heightened volatility.