Natural Gas Prices Forecast: Traders Pricing Mid-Month Chill

Key Points

• U.S. natural gas futures consolidate as traders assess weather forecasts.
• Short-term outlook predicts rain, snow, and light demand.
• Warm pattern continues until Feb 13-14, followed by colder temperatures.

Continued Consolidation

U.S. natural gas futures remain in consolidation mode for the third consecutive session as traders closely analyze upcoming weather forecasts.

At 13:27, Natural Gas Futures are trading $2.055, down $0.027 or -1.30%.

Weather Patterns Impact

According to NatGasWeather, the current exceptionally warm pattern in the U.S. is expected to persist until Feb 13-14. Following this, a colder pattern is anticipated from Feb 15-20, as chilly air from Canada returns to the northern U.S. This shift is likely to result in increased demand, with temperatures ranging from the 10s to 30s in high demand areas.

Short-Term Weather Outlook

In the short term (Feb 6-12), weather systems are predicted to bring rain and snow to various parts of the U.S. Temperatures will generally be near to warmer than normal, with highs in the 40s-50s for the northern U.S. and milder conditions with highs of 50s-70s in the southern U.S. Overall, a very light national demand is expected over the next 7 days.

Congressional Hearings on LNG Pause

In the political arena, U.S. lawmakers are divided over President Joe Biden’s pause on approvals of liquefied natural gas (LNG) exports. A House subcommittee will hold a hearing on the matter, with representatives from both sides of the aisle expressing their views. The pause is aimed at assessing the environmental and economic impacts of increased LNG shipments, following pressure from environmentalists and youth groups concerned about climate change.

Market and Political Factors

While some argue that the pause may affect energy security and international relations, others contend that it is essential to address climate concerns. Notably, the U.S. exported the most LNG last year and plans to double shipments by the end of the decade. The outcome of these hearings and the broader political landscape will play a significant role in shaping the future of U.S. LNG exports.

Short-Term Forecast

Given the uncertainty surrounding the congressional hearings and the potential impact on LNG exports, the short-term forecast for U.S. natural gas futures remains cautious. Traders will closely monitor weather patterns and political developments, which could lead to price volatility in the coming days.

Technical Analysis

Natural gas futures are consolidating on Tuesday slightly below the 50-day moving average at $2.077. This price is likely to act as a pivot over the near-term. Given its current position, the market is in a position to post a volatile breakout in either direction.

A sustained move under the 50-day MA will signal the presence of sellers and should continue the already established downtrend. The daily chart indicates there is plenty of room to the downside with $1.774 the primary target.

Overcoming the 50-day MA will change the intermediate trend to up. In this case, the daily chart indicates there is plenty of room to rally with the nearest target an old top at $2.347, followed by the 200-day moving average at $2.506.