Natural Gas Prices Forecast: NatGas Futures Swayed by Weather & Global Outages

Highlights

• Natural gas prices decline despite forecasted U.S. interior heat.
• Tropical Storm Harold brings cooling rain, reducing Texas power demand.
• U.S. gas flows to LNG plants dip by 3% due to outages and weather.
• Prolonged Australian LNG worker strikes could push global gas prices up.

Natural Gas Prices: A Balancing Act Between Weather and Supply

U.S. natural gas prices are experiencing a downturn, even with rising temperatures forecasted across the interior. A mix of domestic and global influences, from tropical disruptions to maintenance outages, are in play.

Demand Influenced by Weather Patterns

The Midwest braces for a heatwave, projecting an uptick in power usage. However, a predicted cooler trend from August 27-31 mutes this surge. Adding complexity, Tropical Storm Harold’s cooling rains offer Texas some respite, leading to reduced power demand.

U.S. Supply Dynamics:

Gas flows to LNG export facilities have seen about a 3% dip, affected by maintenance outages and weather-related disruptions. The overall gas output has also marginally decreased in August, as per Refinitiv data. On the global front, potential worker strikes at Australian LNG facilities have nudged global gas prices upward, introducing another variable to the supply equation.

Bearish Trends in the Market

Persistently lower spot prices stand out as a key bearish indicator for U.S. natural gas futures, hovering around $2.60 per mmBtu. Additionally, the reduced gas flows to significant LNG export sites, particularly at the Cheniere Energy’s Sabine Pass facility, contribute to the market’s downward pressure.

Short-term Forecast – A Mixed Bag

While Refinitiv’s forecasts hint at a potentially bullish sentiment due to anticipated demand, the combined effects of low spot prices and decreased supply might tilt the balance bearish. The onset of hotter weather in September could act as a counterweight, but the market remains in a state of flux.

In conclusion, the U.S. natural gas market sees itself at a crossroads, with multiple factors pulling in different directions. Only time will unveil the dominant trend as these forces continue to play out.

Technical Analysis

Natural Gas’s current 4-hour price is at 2.567, indicating a slight uptick from the previous 4-hour price of 2.545. Analyzing the moving averages, the market is presently hovering just below both the 200-4H moving average (2.656) and the 50-4H moving average (2.654), suggesting a potential bearish sentiment. The 14-4H RSI stands at 43.57, which, while above the oversold threshold, denotes weaker momentum as it’s below the neutral 50 mark.

With the main support area considerably lower at 1.0844 to 1.0834 and the main resistance area at 3.027 to 3.091, the price remains mid-range. Conclusively, the market showcases a mildly bearish sentiment in the short term.

On the flip-side, if holding support fuels the return of upside momentum then look for a short-covering rally to challenge the moving average resistance cluster at 2.654 to 2.656.