Natural Gas

Natural Gas Price Fundamental Daily Forecast – Chase the Heat or Wait for Pullback? Decision Time

Natural gas futures are edging higher early Tuesday, but off the previous session’s multi-month high. On Monday, prices jumped after forecasts called for a burst of early summer heat, perhaps catching several short-sellers by surprise and triggering some aggressive fund buying on the breakout. Cash prices climbed, too, led upwardly by jumps at eastern hubs, according to Natural Gas Intelligence (NGI). NGI’s Spot Gas National Average rose 23.0 cents to $2.835.

At 10:11 GMT, July Natural Gas futures are trading $3.177, up $0.013 or +0.41%. This is down slightly from Monday’s $3.204 high.

From Now until September, It’s All about the Weather

NGI said a favorable shift in the weather outlook for the next two weeks ignited the optimism in markets. But I have to amend that sentence by adding, weather will be the primary concern until at least Labor Day, or the first week in September. For the next 100 days or so, traders will face the challenge of having to buy strength or playing for a pullback into a value area, which may or may not occur.

Bespoke Says Bring on Some Late Month Heat

Bespoke Weather Services said Monday that it added seven gas-weighted degree days to its 15-day forecast. It noted expectations for intensifying heat in the Midwest and East – with highs in the 80s and the low 90s at times – following a cool start to May in those regions.

“We do still see projected angular momentum anomalies staying quite positive, but other components in the tropical forcing mix appear to set up in a more favorable position for the hotter outcome…giving us our first wave of cooling demand in much of the eastern half of the nation,” the firm added.

EBW Turns Increasingly Bullish

EBW Analytics Group said futures “could be approaching a key junction.” For the past three weeks, the front end of the curve had traded within a narrow range, failing to close above $3.00. But with the shift in weather models over the weekend, the prompt month finally got the jolt it needed.

“This hotter-than-normal weather is only expected to last for a few days and is likely to peak in the high 80s or low 90s in most locations,” EBW said. “With the underlying supply/demand fundamentals looking increasingly bullish, however, it may be sufficient to” support prices above the $3.00 threshold as long as the latest forecasts bear out.

NatGasWeather Sees Upcoming Jump in National Demand

NatGasWeather said conditions early this week could prove choppy, as “a messy pattern” triggers areas of showers and thunderstorms, heaviest over Texas, the South and Northwest.”

High temperatures could range from the comfortable 60s in parts of the northern United States to the 90s in southern reaches, the first said. By the weekend, however, national demand will increase notably “as very warm highs of 80s to 90s sets up over the eastern half of the U.S.”

Next week, the forecaster said, temperatures are likely to moderate in the northern U.S., with highs of 60s to 80s, but remain seasonally warm over southern regions, with highs mostly of 80s and 90s along with 100s in the Southwest deserts.

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James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.