U.S. natural gas price found support, rebounding from a two-week low due to increased feedgas flows to LNG export plants. Forecasts indicate a shift from colder-than-normal weather through December 7 to warmer-than-normal conditions afterward, potentially lowering heating demand.
Natural gas production in the Lower 48 states rose to 102.3 bcfd in December, up from 101.5 bcfd in November but below the record 105.3 bcfd set in December 2023. Analysts expect output to grow in 2025 as LNG demand and prices recover after a weaker 2024.
Despite higher feedgas flows, prices remained near a two-week low as increased production and milder weather forecasts weighed on sentiment. Front-month gas futures for January (NGc1) settled at $3.043 per mmBtu, a slight increase after hitting a low since November 19 earlier this week.
The March-April “widow maker” spread entered rare contango, with April trading higher than March, suggesting an early end to winter heating demand. March traditionally represents the last winter withdrawal month, while April signals the start of summer injection.
further, The Energy Information Administration (EIA) recently released its Natural Gas Storage report, indicating a significant drop in the number of cubic feet of natural gas held in underground storage over the past week. The report shows a decrease of 30 billion cubic feet, a figure that has taken both market analysts and energy sector stakeholders by surprise.
The actual decrease of 30 billion cubic feet starkly contrasts with the forecasted figures. Analysts had predicted a milder decrease, making this sharp decline an unexpected turn of events. This deviation from the forecasted figures implies a stronger demand for natural gas, which could potentially influence natural gas prices in the near future.
Today, the US Labor report and German trade balance data will hold volatility in the prices.
Technical Outlook – Natural Gas Price
Natural gas prices retreated from a high of 292.30 and touched a low of 252.80 yesterday. Prices were able to recover slightly from the low and settled at 260.30, up 0.93%.
The technical chart suggests that prices remain in a bullish momentum as they are trading above the significant breakout level of 238.50. However, the recent candlestick pattern indicates indecisiveness. Additionally, the RSI (14) and its 9-period SMA are not providing any clear direction.
Therefore, it is expected that prices may consolidate around 240-242 before making any significant move. On the downside, a decisive break below 235 could trigger a fall towards 225-218 in a near future.
Until then, Happy Trading!
Commodity Samachar Securities
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