Natural Gas Prices Forecast: Futures Stumble Amid Mild Weather, High Supply

Highlights

• Futures down for eighth straight session
• EIA Report : 97 bcf storage build surpasses forecast
• Warmer outlook expected per NatGasWeather
• Equitrans pipeline delay adds supply uncertainty

U.S. Natural Gas Market Sees Persistent Decline Amid Mild Weather

U.S. natural gas futures have been on a downward trajectory for eight consecutive sessions, influenced by less than expected heating demand and mild weather forecasts through early November.

Despite near-record high amounts of gas flowing to LNG export plants, futures fell 3% to a two-week low. The Energy Information Administration revealed a 97 billion cubic feet (bcf) storage build for the week ended Oct. 13, surpassing the Reuters poll forecast of an 80-bcf build.

Forecasting Mild Demand

NatGasWeather data indicates a warmer than expected outlook across most of the U.S., with a brief spell of colder air over the Great Lakes and the Northeast for the weekend. According to the European Model (EC), there are still discrepancies with the Global Forecast System over the coming 15-day period. Light to seasonal demand is expected, suggesting the gas market might not see a significant boost in prices.

Supply Concerns and Output Levels

Output in the Lower 48 states has reached an average of 103.6 bcfd this October, surpassing previous records. However, demand forecasts are lowered, even with pipeline exports to Mexico and gas flows to U.S. LNG export plants increasing.

Delays and Costs Rise for Mountain Valley Pipeline

Equitrans Midstream has postponed the completion of its Mountain Valley gas pipeline to Q1 2024, escalating the estimated cost to $7.2 billion. The delay adds another layer of uncertainty to the supply chain, which could potentially exert upward pressure on prices.

Short-term Outlook: Bearish

Given the prevailing mild weather forecasts, increased storage builds, and declining futures prices, the short-term market sentiment leans bearish. Traders and analysts will be closely watching for any shifts in weather patterns or demand that could alter this outlook.

Technical Analysis

Natural gas futures, trading at 2.952, are above the 50-day and 200-day moving averages of 2.814 and 2.609, respectively. However, with eight consecutive sessions of declines and prices below the minor support level of 3.002, market sentiment is bearish