Natgas Dropped On Forecasts For The Weather To Turn Mostly Warmer Than Normal

Natural Gas yesterday settled down by -4.78% at 201.3 on forecasts for the weather to turn mostly warmer than normal through mid-February and on a smaller-than-usual storage withdrawal. Federal regulators approved Freeport's plan to start sending gas to one of the plant's three liquefaction trains, which turn gas into LNG. The energy market expects gas prices to rise once the plant starts pulling in large amounts of gas. Freeport can turn about 2.1 billion cubic feet (bcf) of gas into LNG each day. That is about 2% of total U.S. daily gas production. Gas prices were also supported by this week's roughly 3.7 billion cubic feet per day (bcfd) drop in gas output to a one-month low of 93.9 bcfd as winter storms freeze oil and gas wells – known as freeze-offs – in several states, including Texas, Oklahoma, New Mexico, and Pennsylvania.

Meteorologists forecast temperatures across much of the U.S. Lower 48 states would remain below normal through Feb. 4 before rising to mostly above-normal levels from Feb. 5 through at least Feb. 17. Those above-normal levels, however, were lower than previously expected.

Technically market is under fresh selling as the market has witnessed a gain in open interest by 5.48% to settle at 42227 while prices are down -10.1 rupees, now Natural gas is getting support at 195.8 and below same could see a test of 190.2 levels, and resistance is now likely to be seen at 208.5, a move above could see prices testing 215.6.

Trading Ideas:

# Natural gas trading range for the day is 190.2-215.6.
# Natural gas dropped on forecasts for the weather to turn mostly warmer than normal through mid-February
# Federal regulators approved Freeport's plan to start sending gas to one of the plant's three liquefaction trains
# However, the downside is seen limited amid a roughly 3.7 bcfd drop in gas output to a one-month low of 93.9 bcfd.