Natural Gas Price Fundamental Daily Forecast – Early Support from Rising LNG Demand, Cooler Forecasts
Natural gas futures are trading higher on Wednesday as traders attempt to continue this week’s price gains following a setback and technically bearish closing price reversal top on Tuesday. There was no follow-through to the downside earlier today, and the market is in a position to take out yesterday’s gains.
This suggests bullish traders are gaining more confidence in the forecast calling for heating demand, and renewed demand for liquefied natural gas (LNG), following a temporary production shutdown in the Gulf of Mexico earlier in the month.
At 11:55 GMT, December natural gas is trading $3.331, up $0.071 or +2.18%.
Supply/Demand Balance Increasingly Tighter
Natural Gas Intelligence (NGI) reported Tuesday that NatGasWeather said with production down nearly 1 Bcf day/day, the supply/demand balance has become increasingly tight and the background state more bullish for gas. This suggests storage surpluses should continue to decline in the weeks ahead. For now, however, stocks are currently stout at 354 Bcf above the five-year average.
That makes weather forecasts all the more important as the market is less than two weeks away from the official start of the gas winter season.
The forecaster went on to add, “Essentially, a bit of this Global Forecast System (GFS) run toward the bearish side for next week, but the latest GFS again teased ways the start of November can trend colder and needs watching.”
Daily Forecast
We expect natural gas prices to remain supported as long as the forecasts continue to call for cold weather and LNG exports continue to increase.
Analysts at Tudor, Pickering, Holt and Co (TPH) are saying that as winter demand picks up, local constraints relating to full storage and congested export pipes are no longer expected to be an issue. This is likely to lead to higher prices into the early part of the new winter heating season.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
