Natural gas price has bounced from the recent low of $2.422 and is likely to continue its negative trend on the outlook for above-normal US temperatures, which is likely to reduce heating demand. According to Commodity Weather Group, most of the US is likely to see above-average temperatures over the next two weeks.
Natural gas prices are trading weak on the loss of heating demand and low electricity production in the US. Natural gas domestic demand in the US on Wednesday fell by 9.5% y/y to 68.5 bcf. Also, electricity output in the week ended Mar. 27 fell by 0.9% y/y to 67,594 GWh (gigawatt hours).
However, natural gas prices are receiving support from export demand and lower US production. As per Bloomberg data, gas flows to U.S LNG export terminals on Wednesday rose by 22% y/y to 11.8 bcf last Saturday. Also, US gas production on Wednesday fell by 1.7% y/y to 92.273 bcf/d.
Natural gas prices are likely to get fresh direction from the weekly EIA inventory report. The market expects the EIA natural gas inventories to have climbed by 21 bcf.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended Mar. 26 was unchanged for a fourth week at 92 rigs.
Natural gas is facing stiff resistance near 50 days EMA at $2.682 and likely to trade lower on the drop of heating demand in the US. Meanwhile, immediate support levels are seen around $2.428 and $2.37.