Analyst Says Twin Weekend Bullish Catalysts Lifted NatGas

The twin weekend bullish catalysts of higher midsummer cooling demand and the initiation of Plaquemines Phase 2 lifted the August natural gas contract to $3.499 yesterday before it faded.

That’s what Eli Rubin, an energy analyst at EBW Analytics Group, said in an EBW report sent to Rigzone by the EBW team on Tuesday, adding that “while Monday’s gains reset short-term technicals in a bullish direction, Henry Hub spot prices remain mired in the low $3.20s per MMBtu (million British thermal units)”.

The EBW report highlighted that the August natural gas contract closed at $3.466 per MMBtu on Monday. That marked a 15.2 cent, or 4.6 percent, increase, the report outlined.

“Storage Weeks 1-3 each boast more than 90 CDDs [cooling degree days] as the late-July forecast grinds higher,” Rubin said in the report.

“Warmth shifting south – if sustained – may drive a stronger demand influence for Henry Hub than Marcellus-focused heat. Daily CDDs may inflect lower later this week, however, before rebounding into the 7-10 day window,” he added.

“Recent improvements in LNG demand, rising CDDs and a supportive technical reset have reopened a window to test higher,” Rubin continued.

“However, a storage surplus vs five-year norms, subdued Henry Hub physical price realizations, and even a minor tropical threat … suggest the durability of any upside for NYMEX natural gas remains in question,” he went on to state.

In a separate EBW report sent to Rigzone by the EBW team on Monday, Rubin noted that the “arrival of LNG demand [and] summer heat spark[ed a] run higher”.

“While Friday’s attempt to push higher ultimately failed, natural gas prices are again rising alongside the long-awaited emergence of hot weather and strengthening LNG. If bulls can hold gains, a test of technical resistance near $3.61 is possible,” Rubin said in that report.

The EBW energy analyst stated in that report that the bullish LNG catalyst can be divided into two parts.

“First, existing LNG capacity is at last nearing potential at 16 billion cubic feet per day,” he said.

“Second, Plaquemines demand readings at a fresh all-time high indicate a new liquefaction block ramping up ahead of schedule,” he added.

“Rising midsummer CDDs, however, continue to largely exclude Texas and the South Central. DTN also assesses a 30 percent risk of tropical development in the eastern Gulf,” Rubin went on to state.

“Short-covering may further amplify gains at the front of the strip, and building CDDs are possible. Fundamentally, however, ample storage surpluses and weak Henry Hub physical price realizations suggest a near-term test higher may ultimately recede,” Rubin continued.

This EBW report highlighted that the August natural gas contract closed at $3.314 per MMBtu on Friday. It pointed out that this closing price represented a 2.3 cent, or 0.7 percent, drop.

In a statement posted on its website on December 14, 2024, Venture Global announced that it had reached first LNG production at Plaquemines LNG. That statement highlighted that Plaquemines LNG reached a Final Investment Decision on Phase 1 in May 2022, and on Phase 2 in March 2023.

In a statement posted on its site on December 26, 2024, Venture Global announced the successful loading and departure of the first LNG cargo produced from the company’s Plaquemines LNG facility.

At the time of writing, Venture Global has made no mention of the initiation of Plaquemines Phase 2 on its website. Rigzone has contacted Venture Global for comment on the EBW reports. At the time of writing, the company has not responded to Rigzone.

To contact the author, email andreas.exarheas@rigzone.com