Natural gas Dropped As Rising Output And Forecasts Less Heating Demand Next Week

Natural Gas yesterday settled down by -0.09% at 227.4 as rising output and forecasts for less heating demand next week more than offset a bigger-than-expected weekly storage draw. Average gas output in the US Lower 48 states fell to 97.5 bcfd in February from 98.3 bcfd in January as energy firms reduced their drilling plans on lower prices and as extreme cold froze some oil and gas wells earlier in the month. Meanwhile, LNG exports have been growing as Freeport LNG's export plant slowly returned to service after the fire-related shutdown in June 2022. However, some analysts doubt the plant will be able to return to full capacity by the end of April.

Looking ahead, US gas demand is likely to ease next week on expectations that power generators would burn less gas to produce electricity, even though the colder weather is forecasted to last until March 15. US utilities pulled 81 bcf (billion cubic feet) of gas from storage during the week ended February 24, 2023, more than market expectations of a 75 bcf drop. Last week's decrease cut stockpiles to 2.114 trillion cubic feet (tcf), 451 bcf higher than last year at this time and 342 bcf above the five-year average of 1.772 tcf.

Technically market is under fresh selling as the market has witnessed a gain in open interest by 3.22% to settle at 27890 while prices are down -0.2 rupees, now Natural gas is getting support at 222.4 and below same could see a test of 217.4 levels, and resistance is now likely to be seen at 234.7, a move above could see prices testing 242.

Trading Ideas:
# Natural gas trading range for the day is 217.4-242.
# Natural gas dropped as rising output and forecasts for less heating demand next week more than offset a bigger-than-expected weekly storage draw.
# US natural gas storage falls more than expected: EIA
# Average gas output in the US Lower 48 states fell to 97.5 bcfd in February from 98.3 bcfd in January.