Natural Gas Prices Forecast: Weather Demands, Strike Tensions Shape Outlook

Highlights

• U.S. natural gas futures signal a market shift, buffeted by labor unrest overseas and storage fluctuations at home.
• Australia’s unions throw a spanner in the works for Chevron’s LNG operations, threatening strikes that could cost billions.
• U.S. natural gas storage levels defy expectations, rising merely 18 bcf last week—far less than last year’s 54 bcf addition.

Overview

U.S. natural gas futures indicate a shift, even as industry challenges and weather-related demands come into play. Key factors such as union threats at Chevron LNG facilities and U.S. storage dynamics shape the outlook.

Australia’s Union Threats

Unions at Chevron’s LNG operations in Australia threaten potential strikes, potentially costing billions in lost production. Despite a wage agreement at a neighboring Woodside facility, Chevron’s Gorgon and Wheatstone projects remain at risk. The combined North West Shelf, Gorgon, and Wheatstone supply a significant tenth of global LNG.

U.S. Storage Dynamics

Thursday saw U.S. natural gas futures rise by about 1%, attributed to a lower-than-expected storage increase. The U.S. Energy Information Administration reported only an 18 billion cubic feet (bcf) addition to the storage, in stark contrast to last year’s 54 bcf and the five-year average of 49 bcf. Current stockpiles are 9.5% above the five-year norm.

Demand and Weather Factors

Amid an ongoing heatwave, power demand in the U.S. central region is surging. Both MISO and ERCOT grids anticipate high demands, possibly stretching their supply capabilities. Texas, heavily reliant on gas for electricity, experienced a rise in front-month gas futures, although an upcoming cooler weather forecast might temper this.

Short-Term Forecast

Bullish in the short term, the market remains sensitive to union decisions and weather patterns. With potential tropical disturbances on the horizon and fluctuating global gas prices, stakeholders should remain attentive to developments.

Technical Analysis

Natural Gas’s current 4-hour price of 2.497 is below both the 200-4H moving average (2.648) and the 50-4H moving average (2.582), suggesting a bearish sentiment in the short term. This downward trend is further affirmed as the price has fallen from the previous 4-hour mark of 2.534. The 14-4H RSI stands at 44.14, which, while being above the oversold territory, still points towards a weaker momentum.

Furthermore, the price is currently below the main resistance area of 2.636 to 2.674 but slightly above the main support area of 2.542 to 2.487. Given these indicators, the Natural Gas market appears to lean bearish on the 4-hour chart from a technical perspective.

Recapturing the previous support zone and overcoming the 50-4H moving average is likely to shift momentum to the upside.