Natural gas futures are trading over 4% lower late in the session on Tuesday as a slightly cooler shift to mid-term weather forecasts added to headwinds from a prolonged shutdown of Freeport LNG’s export plant, Reuters reported.
Short-Term Weather Forecast
According to NatGasWeather for July 5-11, “Nice to warm conditions will rule most of the northern 1/3 of the U.S. as weak weather systems bring showers and comfortable highs of 60s to 80s. The southern 2/3 of the U.S. will be very warm to hot with highs of upper 80s to 100s, hottest in California to Texas. Overall high national demand is expected over the next 7-days.”
Mid-Term Weather Forecast
NatGasWeather also added that traders should watch for, “A rather hot pattern much of the next 10-days as upper high pressure rules much of the interior U.S. with highs of 90s to 100s for strong national demand. However, a closer to seasonal pattern is favored July 16-18 as weather systems with showers and cooling sweep across the Great Lakes and East, while the hot ridge shifts over the West.”
Freeport Gas Export Facility Shutdown Still Weighing on Supply
Last Thursday, Reuters reported that Freeport’s gas export facility, hit by fire earlier this month, will not be allowed to repair or restart operations until it addresses risks to public safety, according to a pipeline regulator.
Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8, so the expected 90-day outage would leave around 180 bcf of gas available to the U.S. market.
Traders are looking two-weeks into the future and the forecast for July 16-18 isn’t bullish enough to generate enough buying interest at this time.
The forecast for that time period is likely to control the price action this week. When combined with the effects of the Freeport outage, and the bearish chart pattern, it looks as if the market still has plenty of room to the downside.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire