A potential hurricane in the Gulf of Mexico has traders cautious, as disruptions to gas production could lead to short-term supply constraints.
Key Points
- Natural gas prices showed volatility, with a 4.43% rise on Monday and a slight drop today.
- Warmer temperatures are expected until mid-November, with cooler weather likely increasing demand later.
- LNG exports dipped due to a Freeport shutdown, though production growth is anticipated into 2025.
Natural Gas Daily Price Analysis – 05/11/2024
Natural gas prices have shown notable volatility, influenced by both weather-driven demand expectations and changes in supply dynamics. On Monday, U.S. natural gas futures closed at $2.781/MMBtu, marking a significant 4.43% increase from the open price of $2.560.
Today, however, natural gas is trading slightly lower, at $2.775, after opening at $2.789, reflecting a modest 0.22% drop. This slight pullback suggests some profit-taking amid a mix of bullish and bearish factors influencing the market.
Weather-Driven Demand and Hurricane Impacts
U.S. natural gas futures recently surged near $2.8/MMBtu as an impending hurricane in the Gulf of Mexico added uncertainty to supply forecasts. The National Hurricane Center anticipates that Tropical Depression 18 will likely strengthen into a hurricane before moving toward Cuba and the Gulf of Mexico.
While it may weaken to a tropical storm before reaching Louisiana later in the week, potential disruptions to offshore gas production are keeping traders cautious. Any significant production slowdown could lead to short-term supply constraints, bolstering prices further.
Looking beyond this immediate threat, weather forecasts indicate a warmer-than-average trend persisting through mid-November, suggesting steady demand for heating might remain subdued in the short term. However, cooler weather is expected later in November, potentially increasing demand for natural gas as heating needs intensify toward the winter months.
Supply Dynamics and LNG Export Trends
Supply-side factors continue to play a pivotal role in the natural gas market. U.S. LNG exports have seen a decline, falling to 12.0 bcfd from October’s 13.1 bcfd, primarily due to a temporary shutdown at the Freeport LNG facility. The decrease in LNG exports relieves some demand pressure on domestic natural gas, potentially aiding in stockpile growth as we approach winter.
Looking into the future, production is projected to increase into late 2024 and 2025, with new LNG facilities such as Venture Global’s Plaquemines plant and Cheniere Energy’s expansion in Texas expected to enhance U.S. LNG export capacity. This planned expansion in output will likely help meet growing global demand for LNG, with implications for natural gas prices as the domestic supply-to-demand ratio adjusts accordingly.
Key Economic Data and News to Be Released Today
As of today, there are no major economic data releases specifically expected to impact natural gas prices directly. However, traders will keep an eye on updated weather forecasts, hurricane tracking, LNG export figures, and possibly, the US election result, as these elements could influence natural gas movements significantly.
Natural Gas Technical Analysis – 05/11/2024
US Natural Gas price action looks messy at first glance, but a closer look shows a beautiful long setup brewing for the day. Let’s take a closer look at it.
The trend is currently bullish as price is trading above the 200 moving average. We may expect the price to retrace a little to the key level before breaking the range to the upside. Additionally, the RSI suggests that price is currently oversold and we may expect price to reverse and start moving to the upside.
Natural Gas Fibonacci Key Price Levels 05/11/2024
Short-term traders planning to invest in NG today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 2.589 | 2.804 |
| 2.523 | 2.870 |
| 2.416 | 2.978 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
