Natural Gas Price Fundamental Weekly Forecast – Next Major Move Hinges Upon LNG Demand

James Hyerczyk
·3-min read

Natural gas started last week in upbeat fashion as liquefied natural gas (LNG) levels were strong as the market continued its recovery from the shutdowns caused by Hurricane Laura. Levels returned to over 7 Bcf before Hurricane Sally forced another shutdown. Not only did it lead to new shutdowns, but it also ushered in cooler temperatures, which further curtained demand.

Last week, December natural gas futures settled at $3.154, down $0.027 or -0.85%.

The California heat and wild fires created some spot market volatility, but lower demand put a cap on gains. Meanwhile, new forecasts are calling for temperatures that are too cool for air conditioners, but not cold enough for homeowners to fire up their furnaces.

U.S. Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 89 billion cubic feet for the week-ended September 11. That was larger than the increase of 77 billion cubic feet forecast by analysts polled by S&P Global Platts.

Total stocks now stand at 3.614 trillion cubic feet, up 535 billion cubic feet from a year ago, and 421 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for September 18 to September 24, “An early season cool shot will sweep across the Midwest, Great Lakes and Northeast the next few days with highs of upper 50s to lower 70s. A second weather system will track into the Northwest with much needed showers and cooling, while the rest of the U.S. will be quite comfortable with highs of 70s and 80s besides the hotter SW into California with highs of 90s and 100s. Overall, national demand will be moderate to low.”

Weekly Forecast

On Friday, the National Hurricane Center named Tropical Storm Wilfred in the eastern Atlantic, and in doing so, used up its names for 2020. It marked only the second time on record that happened, according to Natural Gas Intelligence.

Meanwhile, a new tropical storm has formed in the Southern Gulf of Mexico and is expected to drift toward Texas, or an area that includes several LNG facilities. This storm is likely to keep production in the Gulf of Mexico shut-in.

Last week’s jump in LNG production is a good sign that domestic industrial energy demand is picking up, but so far it’s only an improvement from the depths of the pandemic late last spring and early summer. This pace has to pick up or the market will face serious containment issues as winter approaches.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire