A mixed US weather forecast is likely to reduce heating demand for natural gas and will keep prices lower. Natural gas prices are currently trading near $2.511 which has dropped significantly from the recent high registered on Feb 17 at $3.396, which is nearly a 24% drop in one month.
The Commodity Weather Group has said the eastern half of the US should see warmer-than-normal temperatures next week, while cooler temperatures are expected in the West.
Natural gas prices are under pressure due to lower domestic demand. As per Bloomberg data, US domestic demand for natural gas on Wednesday fell 10% y/y to 74.5 bcf.
However, export demand, electricity consumption and gas production are likely to provide support to the prices. Gas flows to US LNG export terminals on Wednesday rose to a record 11.7 bcf, up +43% y/y and US electricity output in the week ended Mar. 13 rose +0.3% y/y to 69,318 GWh (gigawatt hours). Also, US dry gas production on Wednesday fell -2.0% y/y to 92.056 bcf/d.
Meanwhile, EIA will release official inventory data later today; the market expects a drop in inventory by 20 bcf. Last Thursday's weekly EIA report showed that inventories the week of March 5 fell -52 bcf to 1,793 bcf. US NG Inventories are down 12.2% y/y, which is 7.3% below the 5-year average.
Natural Gas prices are likely to trade negatively while below the key resistance level of 20 days EMA of $2.683 and 50 days EMA at $2.746, it may find immediate support around $2.451 and $2.393