Natural Gas Prices Rise to 14-Week High – What’s Next?

Natural Gas Prices Rise to 14-Week High - What's Next?

Natural gas shipments rose more than five percent yesterday. Natural Gas Prices rose to a 14-week high on lower-than-expected inventories, stronger-than-expected demand over the next two weeks and continued output declines.

The demand forecasts were mostly higher on forecasts for hotter-than-normal weather in mid- to late-May that should boost the amount of gas power generators burn to keep air conditioners humming. An increase in the amount of gas flowing to liquefied natural gas (LNG) export plants on rising feedgas to Freeport LNG’s plant in Texas was also behind the expected demand increase.

The U.S. Energy Information Administration (EIA) said utilities added 79 billion cubic feet (bcf) of gas into storage during the week ended May 3.

That was smaller than the 85-bcf build analysts forecast in a Reuters poll and compares with an increase of 71 bcf in the same week last year and a five-year (2019-2023) average rise of 81 bcf for this time of year.

That increase left gas stockpiles around 33% above normal levels for this time of year.Front-month gas futures NG1! for June delivery on the New York Mercantile Exchange rose 11.4 cents, or 5.2%, to settle at $2.301 per million British thermal units (mmBtu), their highest close since Jan. 29. MCX natural gas prices touched 193.20, and settled at 191.1 up 4.71%.

That kept the contract in overbought territory for a fifth day in a row for the first time since October 2023.

In the past, Exxon said Golden Pass was on track to produce first LNG in the first half of 2025. Officials at the plant were not immediately available for comment.

Demand for gas is projected to rise in 2025 with several LNG export plants expected to enter service, including Golden Pass, Venture Global’s Plaquemines in Louisiana, Cheniere’s Corpus Christi expansion in Texas and Sempra’s Costa Azul in Mexico. The delay of any of those would reduce the growth expected in gas demand next year.

In the spot market, U.S. power and gas prices turned negative this week in Texas, California and Arizona as pipeline maintenance trapped gas in the Permian Shale in West Texas amid low demand for energy and ample hydropower in the West.

Technical Outlook – Natural Gas Prices

Natural Gas prices jumped to the highest levels since January 2024, and settled at 191.10 up 4.71%. Prices touched 193.20 a day high and low 180.30

On the above chart, formation of a long bullish candle stick on the chart is indicating for a upside momentum to continue. However, prices would need to cross the immediate resistance 195.00 in order to test next resistance 205-215.00.

Else, prices may retreat towards 180-170.00 which may attract buying activities for a near future.

On the downside, crucial support is seen at 155.00-140.00

Happy Trading

Commodity Samachar
Learn and Trade with Ease

Also Read – Economic Data: Should We Brace for Volatility as Macroeconomic Data Takes Spotlight? Banknifty/Nifty: Correction Over or More Downside Ahead?

Recommended – India Energy Week 2024: Influencing Today’s Crude Oil and Natural Gas Trade?

Want help on your Trade?

Chat with Analyst