Natural Gas News: Futures Edge Higher, Key Resistance Levels in Focus Today

U.S. Natural Gas Futures Edge Higher as Traders Weigh Hurricane Helene Impact

U.S. natural gas futures are trading higher on Friday, approaching the week’s high of $2.883, with resistance levels seen at $2.937 and the 200-day moving average of $2.971. Traders are cautious as the market nears these technical levels, expecting sellers to return if prices fail to break higher. However, any surge in buying could trigger a short-covering rally. On the downside, support is seen at the 50-day moving average of $2.486.

At 13:54 GMT, Natural Gas futures are trading $2.841, up $0.088 or +3.20%.

Hurricane Helene’s Disruption and Production Impact

Hurricane Helene, which struck Florida on Thursday, caused widespread power outages across the Southeast, leaving millions without electricity. As a Category 4 storm with winds reaching 140 mph, Helene made landfall near Perry, FL, causing severe damage. Although it has now been downgraded to a tropical storm, it continues to bring heavy winds and flooding to Southern Appalachia.

Despite the storm’s damage, U.S. natural gas production has remained steady. Early data shows that dry gas production stayed close to 100 Bcf/day, with a 6.8% day-over-day increase in Gulf of Mexico output. Traders are monitoring how prolonged outages might affect demand, with expectations of reduced gas consumption in the storm-hit regions.

Natural Gas Storage Update

According to the EIA, working gas in storage was 3,492 Bcf as of September 20, a net increase of 47 Bcf from the prior week. This level is 159 Bcf higher than last year and 233 Bcf above the five-year average, keeping inventories within the historical range. Traders had anticipated a slightly larger build of 52 Bcf, reflecting the market’s modest oversupply.

European LNG Import Challenges

Germany’s efforts to scale up LNG import capacity following the disruption of Russian supplies have helped stabilize European markets, but challenges remain. The state-owned operator, Deutsche Energy Terminal GmbH, oversees two floating storage and regasification units (FSRUs) with plans to launch two more this year. While Germany has increased LNG imports to 5.5 million metric tons since 2022, demand for new capacity lags behind, posing risks to Europe’s gas market stability.

U.S. Natural Gas Exports Remain Flat in Early 2024

U.S. natural gas exports averaged 12.6 Bcf/day in the first half of 2024, a 1% increase year-over-year. LNG exports, pipeline deliveries to Mexico, and imports from Canada have all contributed to this balance. Notably, U.S. pipeline imports from Canada rose by 11% during this period, helping meet winter demand in the western U.S. Additionally, Mexico’s cross-border pipeline capacity is set to expand, with 5.3 Bcf/day of new projects aimed at supplying LNG export terminals in Mexico.

Market Forecast

Given the steady production levels and high storage volumes, U.S. natural gas prices could face downward pressure in the near term, especially if demand softens due to Hurricane Helene’s impact. However, any unexpected supply disruptions or increased LNG exports could trigger bullish momentum. For now, the outlook remains cautiously bearish, with a focus on key resistance and support targets.