NatGas’ landscape is weather dependent, EIA reports

Natural gas futures rise and fall

US natural gas futures have been volatile in recent days, with a rise on Thursday ahead of the Energy Information Administration’s (EIA) weekly storage report. The EIA will release its weekly storage report at 14:30 GMT. However, this follows a 2% decline the previous day due to expected mild weather and lower demand expectations. This decrease in demand is partly due to reduced gas flows to LNG export terminals, especially from the Freeport LNG plant in Texas.

Overview of warehousing and logistics

During the week ending September 8, U.S. utilities added a below-average 48 billion cubic feet of natural gas to inventory, driven by hotter-than-average weather that prompted power generators to burn more fuel. This storage addition was significantly lower than the same week of the previous year and the five-year average. Early estimates for the week ending September 15 show an average increase of 69 Bcf, along with a much higher increase during the same week last year.

Global supply risks and strikes

Internationally, there are potential supply disruptions. Intense strike plans at Chevron’s LNG projects in Australia could pose increased risks to supply. However, Goldman Sachs estimates the probability of a sustained outage leading to a significant rise in gas prices as low. If the labor dispute is resolved, Dutch TTF natural gas prices could decline for the rest of the summer.

US and global production dynamics

There is a notable production halt at Chevron’s Wheatstone facility in Australia, which recently halted a quarter of its LNG production, coinciding with escalating strikes. Meanwhile, in the US, average gas production in the lower 48 states saw a slight decline from the record high set in August. Seasonal change as cold weather approaches may lead to a decline in gas demand in the United States in the coming weeks.

Short term forecast

Given the above dynamics, the short-term outlook looks bearish for natural gas. Factors such as milder weather forecasts, lower demand forecasts, and potential resolutions to labor disputes could limit gains and lower prices in the coming weeks. However, it is important to monitor production dynamics and the geopolitical landscape for any rapid changes. Today’s EIA storage report could also be a source of volatility if it misses the estimate by a large margin.

Technical Analysis

4 hours natural gas

In the natural gas market, the current four-hour price of 2.767 saw a slight increase from its previous value of 2.744. This price is comfortably positioned above both the 200 hourly moving average at 2,650 and the 4-hourly 50 moving average at 2,625, indicating prevailing positive momentum. The 14-hour RSI reading stands at 65.14, which indicates that the market is gaining strength and approaching the overbought zone, although it has not yet crossed the threshold.

Regarding support and resistance, the price is currently trading between the major support area (2.542 to 2.487) and the major resistance area (2.803 to 2.865). Given the current data, market sentiment is on the upside. However, this contradicts the bearish fundamental outlook, indicating impending volatility.

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