Natural gas is trading lower on Monday shortly before the regular session opening. The downside momentum created by the move could be enough to drive the market into the June 20 contract low at $2.115. The selling is being driven by forecasts calling for cooler temperatures during the first 10 days of August.
At 10:46 GMT, September natural gas is trading $2.128, down $0.022 or -1.07%.
On Friday, NatGasWeather wrote, “Demand will increase this weekend through early next week as high pressure strengthens across much of the country with 90s returning across the central, southern, and Mid-Atlantic regions, along with highs of upper 80s over the Midwest and Northeast. However, weather systems will return over the northern and eastern US during the middle of next week, including deep into the Southeast. This will cool highs back into the 70s and 80s for lighter demand and where notably cooler trends have occurred through the week.”
“It will be quite hot over the interior West & Plains/West Texas into early August, but the real issue with the coming pattern is across the East and Southeast where conditions just aren’t hot enough to rest in smaller than normal builds. Overall, we continue to view the coming pattern as not quite hot enough and would require hotter trends over the eastern 1/3 of the US the first ten days of August to warrant bullish sentiment and the overnight data again failed to provide that.”
Weather and production worries are likely to dominate the trade again on Monday with short-sellers already getting a head start during the pre-market session. The early downside momentum could accelerate throughout the session as prices get closer to the contract low at $2.115.
The only way to stop the price slide today is with an updated forecast that shortens the cooling off period, or puts heat back into the picture for later in the month.