The warmer temperature forecast is keeping a lid on natural gas prices
Natural gas prices corrected from a recent high of 3.316 on the expectation of change in the weather forecast. Warmer weather condition expectation from the previous forecast is likely to reduce heating demand in the US in the coming days. Weather forecasting agency Maxar on Thursday said that above-normal temperatures are expected in the eastern US from Feb. 28-Mar. 4 and that Texas and Oklahoma will trend warmer from Feb. 23-27.
NG prices rally from last two weeks was supported by increasing domestic demand, drop in inventory, high electricity demand and low level of production. However, a drop in export demand kept a lid on Ng prices.
Weekly inventory report released by EIA was positive for NG prices. EIA reported that weekly inventories fell by 237 bcf last week, against expectations of a drop of 252 bcf.
As per Bloomberg data, US domestic demand on Thursday rose +18% y/y to 106 bcf. US electricity output in the week ended Feb. 13 rose +8.5% y/y to 83,686 GWh (gigawatt hours). US gas production on Thursday dropped -24.5% y/y to 70.682 bcf/d.
However, US gas flow to LNG export terminals fell -44% y/y to 4.55 bcf on Thursday as per Bloomberg data. On Wednesday, flows to export terminals slumped to 3.9 bcf, down -63% w/w and the lowest in 5 months.
Natural gas March expiry contract is likely to find stiff resistance near 3.323-3.496 meanwhile key support levels are seen around 20 days EMA at 2.928 and 50 days EMA at 2.817.