Natural gas slid on projections of cooler weather over the next two weeks

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  • Commodities News
Natural gas slid on projections of cooler weather over the next two weeks
Credit: © Reuters.

Natural gas prices experienced a decline of -2.22% yesterday, settling at 211.4 due to forecasts of cooling weather over the next two weeks. However, several factors tempered these losses. Forecasts indicated higher gas demand over the same period, a decrease in daily gas output, and increased gas flow to liquefied natural gas (LNG) export facilities. Daily, gas output was expected to drop by approximately 2.7 billion cubic feet per day (bcfd), hitting a preliminary five-month low of 99.6 bcfd. This marked the most significant one-day output drop since mid-June, though it's important to note that preliminary data often undergo revisions later in the day.

While the weather in the lower 48 U.S. states was predicted to be less hot than initially anticipated for the next two weeks, meteorologists expected temperatures to remain above normal until at least September 21st. Consequently, the London Stock Exchange Group (LON: LSEG ) forecasted that U.S. gas demand, including exports, would remain steady at around 101.2 bcfd for the upcoming week and the one following. These projections represented an increase from LSEG's earlier outlook provided on Tuesday.

From a technical perspective, the market displayed signs of fresh selling pressure. Open interest surged by 16.12% to reach 55,424, while prices fell by -4.8 rupees. Currently, natural gas finds support at 207.9, and if it dips below this level, it could potentially test 204.4. On the flip side, resistance is now expected at 216.6, and if prices manage to surpass this level, they may aim for 221.8.

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