Production Decline and LNG Developments
Natural gas production has dipped below the crucial 100 Bcf/d mark, a key threshold for market sentiment. This decline, coupled with Freeport LNG’s preparations to increase production, could provide support for prices. Freeport LNG has nominated more feed gas, indicating a phased restart of its facility following damage from Hurricane Beryl.
Weather Patterns and Demand Outlook
High pressure systems are dominating the western and southern United States, driving temperatures into the 90s and 100s in these regions. However, cooler conditions are expected across the Midwest, Plains, and Northeast, with highs in the 70s to low 80s. This mixed weather pattern suggests a moderate national demand outlook for the next five days.
EIA Storage Report Expectations
Today’s EIA storage report is anticipated to show a build of 23-29 Bcf, significantly lower than the five-year average of 49 Bcf. This smaller-than-usual increase could be attributed to the impacts of Hurricane Beryl, reduced wind energy generation, and the extended Fourth of July holiday weekend.
Market Forecast
The natural gas market appears poised for a potential rally, particularly if the EIA report aligns with or falls below expectations. The psychological $2.00 level may provide initial support, with further support at $1.975 and $1.880. Any upward movement is likely to be sharp, driven by short-covering rather than new buying interest.
However, sustained bullish momentum will depend on continued production declines or announcements of output cuts from major producers. Traders should remain alert to these fundamental factors as they navigate the current market environment.
Technical Analysis
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