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Natural Gas Update Fxempire
Keep watch on Freeport outage repair process.

Natural Gas News: Futures Steady Amid Mild Weather and Production Cuts
By:
James Hyerczyk
Updated: Mar 12, 2024, 13:14 CDT

Key Points:
Mild U.S. weather patterns lead to lower natural gas demand.
Major producers slash natural gas output amid falling prices.
Freeport LNG outage exacerbates domestic natural gas oversupply.
Natural Gas News:
In this article:
Natural Gas

-2.87%
Weather Impact and Demand
U.S. natural gas futures are currently on a downtrend, influenced by weather patterns and demand fluctuations. Over the next week, the interior United States will experience mild conditions with temperatures ranging from the 50s to 80s. A cold front moving into central and eastern regions by the weekend will bring higher demand due to cooler temperatures. However, overall demand is forecasted to be very low until Saturday, then shifting to moderate levels on Sunday and Monday.

At 12:45 GMT, US Natural Gas futures are trading $1.806, up $0.047 or +2.67%.

Storage and Supply Data
Last week, the U.S. Energy Information Administration (EIA) reported a modest 40 billion cubic feet (bcf) withdrawal from natural gas storage last week, markedly lower than both last year’s 72 bcf and the five-year average of 93 bcf. This decrease is attributed to the warmer weather patterns and a corresponding reduction in demand.

Production Cuts
In reaction to the price decline, major producers are cutting back on output. The production in the Lower 48 states has fallen to approximately 100.2 billion cubic feet per day (bcfd), a dip from February’s 104.1 bcfd. Notable companies like Chesapeake Energy are implementing significant reductions, with a planned 30% cut in 2024 production. EQT Corporation has also reduced nearly 1 bcfd of its production through March.

LNG Export Challenges
The natural gas sector is facing headwinds in the LNG export market. An outage at the Freeport LNG facility in Texas has led to reduced gas flow to export plants, further aggravating the domestic supply glut. While the facility is expected to restart operations by mid-March, this timeline is still uncertain.

Short-Term Market Forecast
Considering the current weather conditions, storage data, production cuts, and LNG export challenges, the short-term outlook for U.S. natural gas futures leans towards bearish. The combination of increased storage levels, reduced demand due to mild weather, and challenges in the LNG export sector are likely to keep prices under pressure in the near term.

Technical Analysis

Daily Natural Gas
Natural gas is posting a two-sided trade early Tuesday with traders seemingly trying to establish a support base inside a short-term retracement zone at $1.808 to $1.760.

A sustained move over $1.808 will indicate the presence of counter-trend buyers. They are going to try to drive the market into the 50-day moving average resistance at $2.063.

A failure to hold $1.760 could create the downside momentum needed to challenge the contract low at $1.607.