Daily Fundamental Natural Gas Price Forecast - Tropical Storm Nicole Anticipated to Offset Cold Weather Demand

Wednesday's closing price for natural gas futures was lower due to projections for less chilly weather in late November amid persistent volatility. The market reached a one-month high on Monday, but two days later it was hitting a one-week low.

In addition to forecasts of milder weather, traders reacted to a severe tropical storm approaching the Southeast. It is anticipated to induce power interruptions and, as a result, reduce demand across a wide region.

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Additionally, traders are preparing for another increase in fat storage on Thursday and the delayed restoration of a crucial export facility.

The December natural gas price finished at $5.865, down $0.273 or 4.45%, on Wednesday. The United States Natural Gas Fund ETF (UNG) finished at $19.16, a decrease of $1.04, or -5.15 percent.

"Imminent cold fronts and flat output this week at 99 Bcf/d benefited bulls," NatGasWeather reported, "with forecasts Wednesday indicating a significant move toward wintry weather beginning this weekend and extending through the current trading week."

On paper, this prognosis looks optimistic, but tropical storm Nicole is interfering. Natural Gas Intelligence (NGI) said that the storm's winds are strong enough to prompt emergency declarations and power outage forecasts and to significantly reduce near-term gas demand through the current trading week.

The price of natural gas may have bottomed out at $5.345.00 on October 24, but the present technical picture shows that it may need to create a stronger support base before going upward.

It will require a catalyst to establish the support base. Strong heating demand and increased demand from liquefied natural gas (LNG) facilities are two such catalysts.

Wednesday, the restoration to service of the Freeport LNG export facility in Texas, originally scheduled for this month, remained uncertain. NGI reported that the Texas LNG export facility had yet to establish the status of required regulatory clearances for reopening after a lengthy outage dating back to a June fire.

When it does reopen, Freeport could withdraw approximately 2.0 Bcf/d of domestic natural gas to meet export demand. Samantha Dart, an analyst at Goldman Sachs, stated that if this doesn't occur this month, U.S. demand will be less than anticipated and supply could balloon more in the near future, resulting in an increase in price pressure.

With Thursday's inventory report, traders are anticipating another robust build. NGI forecasts a buildup of 68 Bcf. The projection compared to a five-year average of 20 Bcf of production. In the same week of 2021, EIA reported a rise of 15 Bcf.