Will Natural Gas Prices Rebound Soon or Slide Further? Key Trends to Watch This Week

Natural gas prices in the US had a rough start to the week and had a hard time going up because of ongoing oversupply and demand that was weaker than predicted. Last week, futures prices plummeted drastically. Henry Hub prices momentarily dropped below $2.00, wiping off gains made previously because to anticipation about the weather.

Prices are being pushed down by increasing production levels, especially from important shale basins.  The U.S. Energy Information Administration (EIA) says that output is still close to record highs and that storage injections have been higher than the five-year average for recent weeks. The market is having a hard time rallying since inventories are much higher than usual for this time of year.

Weather Shifts May Offer Temporary Support

Forecasts for the weather show that regions of Texas and the Southeast will have another round of heat, which could increase demand for cooling and temporarily raise costs.  But these improvements are probably only going to last for a little while unless extended heat waves make the supply-demand balance even more unstable.

LNG export demand is another factor to think about.  Kpler’s most recent data shows that U.S. LNG exports have slowed down a bit, notably to Asia. This is because spot prices are low and Russian flows into Europe are strong.  This makes pricing in the US even lower.

Recent data from the CFTC reveals a big drop in speculative long positions, which shows that investors are losing faith.  Traders may keep choosing the bearish side unless there is a structural change in the fundamentals or an unexpected event.

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