Natural gas prices for the month of April are trading near $2.653, marginally lower from previous closing on mixed weather outlook for US which is likely to reduce heating demand and negative for natural gas prices.
According to weather forecasting agency Maxar, it is likely to be warmer temperatures in the central and eastern US through Mar. 12. Also WSI Energycast have forecasted above-normal temperatures across the southern, central, and eastern US from Mar. 10-14 which is going to reduce heating demand significantly.
US domestic natural gas demand on Monday fell -1.0% y/y to 75 bcf. Also, US electricity output in the week ended Feb. 27 fell -1.6% y/y to 73,408 GWh (gigawatt hours) which is negative for natural gas consumption.
However natural gas prices are getting support from export demand and low production levels. Gas flows to US LNG export terminals on Monday, were seen at 10.6 bcf, up +40% y/y. Also, US gas production on Monday fell -1.4% y/y to 92.059 bcf/d which is bullish for natural gas prices.
Natural fas prices to get further direction from natural gas inventory data which will be released later on Thursday. Last Thursday's weekly EIA report showed that natural gas inventories the week of Feb. 26 fell -98 bcf to a 1-3/4 year low of 1,845 bcf. Current Inventories are down -11.8% y/y and are -8.8% below the 5-year average.
Meanwhile, Baker Hughes reported last Friday that the number of active US natural gas drilling rigs in the week ended Mar. 5 was unchanged at 92 rigs.
Natural gas prices are likely to trade negative while below key resistance levels of 20 days EMA at $2.792 while immediate support levels are seen around $2.550 and $2.419