Natural Gas Prices Forecast: Weather, Storage Data to Drive US Futures Outlook

Highlights

• EIA Storage Report Key for Gas Prices
• Weather Patterns Impacting Gas Demand
• Potential Volatility in Natural Gas Futures

U.S. Natural Gas Prices Fluctuate on Weather Changes, Global LNG Shifts

Last week in U.S. natural gas futures was characterized by notable fluctuations, influenced by diverse market forces. The week commenced with a surge in futures, driven by an upswing in national demand due to cooler temperatures in regions like the Plains and Texas. This initial increase, however, was short-lived as weather forecasts soon predicted milder conditions across most of the U.S., dampening the initial rally.

The global LNG market and European LNG imports also played a crucial role midweek. Despite a downward trend in spot LNG prices in North Asia and mixed import patterns in Asia, the U.S. stood out as a significant LNG exporter. High European gas inventories reduced the continent’s need for additional LNG supplies, impacting the global market dynamics.

Toward the week’s end, U.S. natural gas futures reacted to revised weather forecasts predicting colder temperatures, leading to increased demand expectations. Nonetheless, these expectations were moderated by concerns about potential demand drops and escalating production, which balanced the market’s response to the cooler weather forecasts.

Next Week’s Forecast: Heightened Volatility Awaits Key EIA Report

The forthcoming week in U.S. natural gas futures is poised at a critical juncture, with the impending EIA storage report for the week-ending November 17 set to be a key determinant. Recent storage trends have shown a draw followed by a build, highlighting the seasonal shifts affecting gas demand.

If the upcoming report indicates a storage draw, it could signal rising demand, likely due to colder temperatures, which might bolster natural gas prices and introduce a bullish sentiment. This scenario is particularly significant in the winter, as increased heating needs typically boost demand for natural gas.

Conversely, another build in storage, potentially due to sustained high production and milder weather conditions, might continue to exert downward pressure on prices. The anticipation of colder weather, with a predicted increase in Heating Degree Days, suggests heightened heating requirements, which could impact demand.

Despite a bearish tilt at the end of last week, driven by a storage build and high production levels, the market remains highly responsive to weather forecasts. A shift towards colder conditions could quickly alter market dynamics, potentially driving up natural gas prices. Therefore, the upcoming week’s outlook hinges on the interplay of weather patterns, storage levels, and production rates, creating an unpredictable environment for U.S. natural gas futures at last week’s end.