Supply Falls in the USA Lead Natural Gas Prices to 7 Weeks High Amidst Positive Demand Outlook

U.S. Natural Gas prices have been escalated by 6 percent to a seven-week pick on September 29. The price hike has been driven by decreased production activities and a heightened demand outlook against the backlash of October's future expiration.

As reported by the Energy Information Administration, the storage build-up has been more than the amount anticipated for that mentioned week, while according to the forecast, the next week has been expected to be calmer with diminished demand. Thus, Natural Gas prices on September 29 stood at USD 2850 per metric tonne, Ex-Louisiana, USA.

Exploring the intricacies of supply, there has been a decline in gas throughput compared to August's levels. The meteorological forecast has hinted at a warmer climate in mid-October, which might nudge power generators to keep the usage of Natural Gas in air conditioners in check. Furthermore, record export volume to Mexico, demand fluctuations, and geopolitical influences have complicated traders' landscape.

Natural Gas exports to Mexico through pipeline have surged to 7.3 bcfd last month. As per projections, this demand for Natural Gas will continue once Fortress Energy's plant at Altamira starts its LNG export operations.

On the other hand, the resumption of Norway's Natural Gas supply post-maintenance has caused a drop in demand for North American Natural Gas in the Eurozone. Increased storage levels and resumed supply in the Eurozone suggest a bearish outlook of Natural Gas in the North American market despite rising demand.

Larger than expected storage of Natural Gas in the U.S. and a drop in October contract prices have indicated that supply has been outpacing the demand currently, which might pressurize the Natural Gas price further.

The support region of Natural Gas ranges between 2.629-2.699 and the minor resistance level has been 3.002.

In the short-term outlook, markets have been slightly skeptical about future scenarios. Although a firm supply has been maintained, the potential domestic and international demand outlook might add a bullish undertone to the Natural Gas market in the upcoming weeks. However, marketers should keep their eyes on weather forecasts and Natural Gas rig count, which can switch the directions.

In terms of Global context, the country will lead the Natural Gas market as the largest exporter by 2023, backed by rising demand and tight supply after Russia invaded Ukraine. Gas prices in net importing markets like Europe and Asia have been at a staggering level currently, which might elevate further with rising domestic demand.