US Stock Market Overview – Stock Rally Led by the Nasdaq; Microsoft and Semis Drive the Gains

US stocks moved higher on Monday, as traders anticipated a deal between the White House and Congressional Democrats. Most sectors in the S&P 500 index were higher, led by Healthcare. Real-estate bucked the trend. The Nasdaq hit a fresh new record high, led by gains in Microsoft and the Semis. The VIX volatility index hit a fresh 5-month low at 22, before rebounding into the close to settle near 24.40. Apple shares continued to rally climbing nearly 3% on Monday after notching up a 14% gain last week.

Manufacturing in the US accelerated the most in 16-months, which is a forward-looking index. This helped buoy US yields which in turn help the US dollar rebound. The dollar rebounded putting pressure on precious metals, but oil and natural gas rallied helping to buoy the energy space. Natural gas prices surged 16% on Monday on a warm weather forecast. Microsoft confirmed that it would work out a deal to purchase Chinese company TikTok from Byedance. President Trump said that he would want part of the sale to come to the American People. This enraged some businesses in China.

ISM Manufacturing Accelerates by the Fast Pace in 16-months

U.S. manufacturing expanded in July at the fastest pace since March 2019. The Institute for Supply Management reported that its manufacturing index rose to 54.2 last month from 52.6. Expectations were for a reading of 53.6. The ISM’s measure of production increased in July to 62.1, the highest level since August 2018, and a gauge of orders climbed to 61.5, which was the strongest since September of that year. Customer inventories fell to 41.6 in July, the lowest this year and showing that stockpiles were shrinking at a faster pace. Factory inventories also declined after barely growing a month earlier.

Natural Gas Price Prediction – Prices Surge More than 16% on Warm Weather Forecast

Natural gas prices broke out on Monday, as short were squeezed out of the market. Warmer than normal weather which is expected to cover most of the mid-west and east coast over the next 6-10 and 8-14 days generated a surge in prices that buoy natural gas more than 15%. There is one tropical stork in the Atlantic but it is moving up the east coast and will not generate a disturbance to natural gas installations.

Technical Analysis

Natural gas prices surged higher rising 16.5% on Monday. Support is seen near a downward sloping trend line that comes in near 1.92. Resistance is seen near the May 2020 highs at 2.50. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium term momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Demand Rises in Latest Week

Demand rises across all domestic sectors, with power generation reaching a summer high. Total U.S. consumption of natural gas rose by 0.9% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 0.7% week over week, reaching 43.6 Bcf/d on Monday, the highest level so far in summer 2020. Industrial sector consumption increased by 1.3% week over week. In the residential and commercial sectors, consumption increased by 0.6%. Natural gas exports to Mexico decreased 0.9%.

Natural Gas Price Forecast – Natural Gas Markets Shoot Through 200 EMA

Natural gas markets have shot through the roof during the trading session on Monday to kick off the week, slicing through the 200 day EMA. That being said, we are dealing with the $2.00 level, an area that of course will cause a certain amount of psychological resistance. Over the last several months, we have been building on this range, and I think we are trying to put in some type of bottom for the market longer term, due to the fact that we are seen bankruptcies out there, and that should bring down supply in theory. Furthermore, there has been a pretty significant amount of heat in the United States driving up demand.

NATGAS Video 04.08.20

Add in a tropical storm in the fact that the US dollar is losing value, then you have an opportunity for natural gas to reclaim some real estate to the upside. I think we probably have a pullback ahead of us, but I would be willing to buy that dip, especially somewhere near the $1.80 level if we can get down there.

If you have the ability to trade in small increments, then we could be looking at a potential trend change, at least for the second half of the year, which could provide a nice little opportunity. I do not have any interest in shorting this market because we are so low from a historical standpoint. When you zoom out several years, you can see that clearly the $1.50 level was a major turning point more than once.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Expectations of Higher Export Demand, Possible Heat Supportive

A shift in the short-term forecast over the weekend was all it took to revive the sluggish natural gas market on Monday. The news that heat was being put back into the forecast helped offset the generally bearish tone created by worries that Hurricane Isaias would bring in cooler temperatures throughout the Midwest and East Coast.

At 14:30 GMT, September natural gas is trading $2.008, up $0.209 or +11.62%.

NatGasWeather wrote Monday morning, “The weekend weather data was only slightly changed in most models except for the European model, which gained a hefty amount of demand. In fact, the European model was cooler than the rest of the data by nearly 10 CDD’s at Friday’s close, then trended notably hotter over the weekend to now nearly 10 CDD’s hotter than the rest of the data.”

“The natural gas markets are clearly hoping the hotter European model is correct with prices up more than 20 cents this morning. Although, prices were likely aided by LNG/feedgas/exports increasing to 4 Bcf over the weekend to tighten the balance. The European model has been running too hot in most instances this summer, so there risk if it loses some demand to line up better with the rest of the data.”

Additionally, Natural Gas Intelligence (NGI) reported that liquefied natural gas (LNG) feed gas demand jumped higher over the weekend, with Genscape Inc.’s estimate showing a 740 MMcf/d day/day increase on Saturday.

“Recently, a Bloomberg survey of traders found that up to 45 cargo cancellations are expected for the month of August, down from roughly 50 for the month prior,” Genscape analyst Preston Fussee-Durham said.

The largest increase in feed gas inventories occurred at Cheniere Energy Inc.’s Sabine Pass terminal, with volumes to the facility climbing nearly 580 MMcf/d, according to Genscape estimates.

“Effective for today’s gas day (based on timely cycle nominations), feed gas demand from interstate pipelines stands at 3.85 Bcf/d – 0.68 Bcf/d more than July’s average of 3.17 Bcf/d,” Fussee-Durham said.

Daily Forecast

Bullish traders are responding to the news without hesitation. They really had no choice, the weather guys put heat back into the forecast, and demand for feed gas was up. These are short-term bullish factors.

Although there is no significant resistance until $2.499, there is room to rally into a 50% to 61.8% resistance zone at $2.041 to $2.149. Sellers could return on a move into this area.

The return of hot weather and firmer demand for LNG may not have that much of an impact on nearby natural gas futures, but it means a lot to deferred traders who want to see storage supply fall head of the winter demand season.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Weather News Dominates the Trade

Natural gas futures finished lower on Friday as summer heat moderated, a hurricane headed toward Florida potentially zapping cooling demand and surging coronavirus-cases continued to weigh on demand. Bespoke Weather Services expected temperatures in many parts of the country to cool down over the coming week.

Meanwhile, Isaias strengthened into a Category 1 hurricane late Thursday, according to the National Hurricane Center (NHC). At the end of the week, it looks as if the weather is going to dominate the news over the next week or two.

On Friday, September Natural Gas futures settled at $1.816, down $0.013 or -0.71%.

Bespoke also said its weather models showed “a sizable trough diving into the middle of the nation, which pushes eastward slowly” over the first full week of August. “We also expect some impact along the East Coast from Hurricane Isaias the next few days. It is not clear yet if the storm will bring demand destruction to the big cities of the East, but that is a possibility.”

The National Hurricane Center (NHC) said on Friday that the hurricane has crossed the Dominican Republic with sustained winds up to 80 mph and was battering the Southeastern Bahamas with heavy rains and strong winds that threatened severe flooding. The hurricane was expected to approach Florida’s east coast by Saturday, with rain totals up to six inches in some areas over the weekend, the NHC said.

In continuing our weather theme, analysts at Tudor, Pickering, Holt & Co. (TPH) said the sustained intensity of heat over most of July generated strong demand and eased the risk of filling storage.

“On the other hand, weather forecasts are trending materially cooler for August and this will likely push inventories above the high end of the five-year range through August,” the TPH analysts said. They said the latest injection “implies a roughly balanced market on weather-adjusted basis” and expect the coming week to look “very similar, with our early modeling pointing to a build of 26 Bcf.”

Looking ahead to next week, according to NatGasWeather.com for August 3-9, “An unseasonably strong cool shot will bring showers and comfortable highs of 70s to 80s to the central U.S., Midwest and Ohio Valley this week for much lighter national demand. Heavy rain is expected along the East Coast Monday – Tuesday as Tropical Storm Isaias tracks northward. Regionally hot conditions continue across the West and far southern U.S. with highs of 90s to 100s. Warmer conditions will push into the central and northern U.S. next weekend, while hot most elsewhere, increasing national demand back to strong levels.”

Natural Gas Price Prediction – Prices Declined as ISAAIS Heads Eastward

Natural gas prices moved lower on Friday declining by 2.5%. This followed news from Baker Huges that oil and gas rig counts were unchanged in the current week. Hurricane ISAAIS now appears to be headed to the east coast of Florida and up the coast and is unlikely to hit any of the natural gas installations in the Gulf of Mexico. Two storms are located off the coast of Africa, neither are expected to become a tropical storm according to NOAA.

Technical Analysis

Natural gas prices moved lower on Friday declining by 2.5% after dropping 5.5% on Thursday. Prices closed through support near the 10-day moving average at 1.80, which is now seen as short term resistance. Resistance is seen near the 50-day moving average at 1.82. Target support is seen near the July lows at 1.65. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a flattening trajectory which points to consolidation.

Supply rises Slightly

Supply increased in the latest week according to the EIA. The average total supply of natural gas rose by 0.1% compared with the previous report week. Dry natural gas production grew by 0.2% compared with the previous report week. Average net imports from Canada decreased by 2.1% from last week.

Natural Gas Weekly Price Forecast – NG Markets Form Neutral Candle for the Week

Natural gas markets have gone back and forth during the course of the week, showing signs of confusion as the market has been bouncing around in this range for some time. Ultimately, the natural gas market is testing a major support level underneath in the form of the $1.50 level, which is a major support level going back multiple years. At this point, I think we are getting closer to the turnaround that this market has needed for some time. If we can break above the $2.00 level, this market can go much higher.

NATGAS Video 03.08.20

While I know that the oversupply of natural gas continues to be a major problem, the reality is that the commodity has gotten so cheap that we are seeing in multiple companies go bankrupt. With that being the case, we should eventually see supply dwindle and that should drive this market higher. I would be a bit surprised if we break down below the $1.50 level, because sooner or later you have the problem of where natural gas simply is not worth enough to bother drilling for. However, that does not mean that we take off to the upside right away either. Ultimately, I think it is a scenario where we will see a lot of noisy trading, and then an eventual breakout, perhaps later this year as temperatures plunges in America. Right now, things remain very back, and forth so short-term traders probably are going to be much more interested than longer-term traders.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Continue Pull Back

Natural gas markets have initially tried to rally during the trading session on Friday but gave back the gains in order to form a less than ideal candlestick. That being the case, the market looks as if it is struggling to bet and it is also likely that we may get a little bit of follow-through. Nonetheless, I am not a seller here because I see plenty of buying opportunities underneath and I think that we are starting to see a significant amount of support in general. The 20 day EMA has just crossed above the 50 day EMA, a bullish sign indeed. Regardless though, I am not looking for a bigger move, rather I am looking for a continuation of the overall range.

NATGAS Video 03.08.20

The range is between the $1.50 level, and the $2.00 level. As long as we do not break out of this range, I think a simple back-and-forth type of trading strategy might work, but I prefer buying the dips as we have seen so much in the way of resiliency. Furthermore, we have a lot of bankruptcies in this sector that will continue to drive down the overall supply, just as the extreme heat in the United States has increased the demand. Overall, I think this market continues to grind back and forth until we get colder temperatures, and then at that point we may finally see a bit of a breakout to the upside. The reason I say this is that the $1.50 level has been crucial for support going back years. A breakdown below that level would be an extraordinary sight to behold.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Drop Following Inventory Report

Natural gas prices moved lower on Thursday as tropical storm Isaias formed in the Atlantic. The storm is headed toward the Gulf of Mexico but is expected to turn toward Florida. There is also a new disturbance that has moved off the coast of Africa, which has a 50% chance of becoming a tropical storm. The weather is expected to remain warmer than normal for the next 8-14 days. Inventories increased by slightly more than expected according to the Energy Information Administration.

Technical Analysis

Natural gas prices moved lower on Thursday dropping 5.5% and making a lower high and a lower low. Support is seen near the 10-day moving average at 1.80. Resistance is seen near the 50-day moving average at 1.82. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a flattening trajectory which points to consolidation.

Inventories Grow by More than Expected

Natural gas in storage was 3,241 Bcf as of Friday, July 24, 2020, according to the EIA. This represents a net increase of 26 Bcf from the previous week. Expectations were for a 24 Bcf build according to survey provider Estimize. Stocks were 626 Bcf higher than last year at this time and 429 Bcf above the five-year average of 2,812 Bcf. At 3,241 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Natural Gas Markets Gap Higher

Natural gas markets continue to be very volatile, gapping higher at the open on Thursday before rolling over and filling the gap. Ultimately, I think we are still going to the top of the huge pink box that I have drawn on the chart, meaning the $2.00 area. Longer-term, I do not know if we can break above there because I see a significant amount of resistance extending to the $2.10 level, but right now this is a market that we have going. We are simply bouncing around between the $2.00 level on the top and the $1.50 level on the bottom.

NATGAS Video 31.07.20

For what it is worth, the $1.50 level has been massive support on longer-term charts, so it should not be a huge surprise that we have bounced from there several times. I think at this point we are trying to build some type of base for the winter as several US companies have gone out of business and of course hotter temperatures than usual in the United States have been driving up demand. Beyond that, we have to then questioned whether or not supply will be an issue this winter.

I do not know that it will but once it gets a bit colder, we may see a drive higher. The question now is whether or not we are forming some type of basing pattern for the winter? I suspect that might be the case, but in the meantime simply playing this range makes the most sense. I think we do go a little bit higher before we pull back again substantially.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – EIA Storage Build Expected to Come in Below Average

Natural gas futures are edging lower on Thursday shortly after the regular session opening as traders await the release of a weekly government storage that is supposed to show a build below average. The news is expected to ease storage capacity concerns. Traders said a combination of intense summer heat strong cooling demand led to the prediction of a low injection.

At 12:27 GMT, September natural gas futures are trading $1.903, down $0.027 or -1.40%.

U.S. Energy Information Administration Weekly Storage Report

Natural Gas Intelligence (NGI) is reporting that Energy Aspects issued a preliminary estimate for an 18 Bcf injection for the week-ending July 24 in this week’s Energy Information Administration (EIA) storage report.

“Other predictions for Thursday’s EIA report have been pointing to an injection in the 20s Bcf range. A Bloomberg survey as of early Wednesday showed a median prediction of 23 Bcf based on six estimates ranging from 18 Bcf to 30 Bcf. NGI’s storage model predicted a build of 24 Bcf”,  Natural Gas Intelligence wrote.

The forecasts compared with a 56 Bcf build for the same week a year earlier and the five-year average injection of 33 Bcf, according to the EIA.

The averages of injection forecasts, if proven accurate, would mark the lowest weekly figure this summer and the lowest in a five-week string of sub-100 Bcf additions to gas stockpiles, NGI reported.

Short-Term Weather Outlook

According to NatGasWeather for July 30 to August 5, “Comfortable highs of 70s to 80s continues across the Midwest and Great Lakes, while also slowly pushing into the Northeast to cool highs from 90s to 80s. Texas and the West remain hot to very hot with highs of 90s to 110s, while hot and humid over the South and Southeast with mid-90s. A cooler trending weather system with heavy showers will sweep across the Midwest and east-central U.S. this weekend and next week with highs of only 70s to lower 80s for much lighter national demand.

Tropical Storm Isaias

Tropical Storm Isaias slightly strengthened a few hours after it was officially given a name, and the windshield-wiper effect continues as the track, once again, shifted east.

On Thursday morning, the storm had winds up to 60 mph as it moved northwest, bringing heavy rainfall to Puerto Rico. As of the 5 a.m. track, the coastal parts of the Tampa Bay, Florida region are now longer within the cone of uncertainty. This means the storm is veering to the East, away from the Gulf of Mexico.

The forecast for Florida this weekend depends on how the storm interacts with Hispaniola. The new track keeps Isaias barely offshore the east coast of Florida, and then it turns it up to the Carolinas.

Daily Forecast

A lower-than-expected injection could trigger another spike to the upside on Thursday as this would drive out some of the weaker short-sellers. However, the forecast for cooler temperatures is likely to prevent the rally from gaining much traction. It fact, it may even encourage some of the larger sellers to implement new positions.

Hurricane Isaias should still be monitored, but it looks like its curving East toward the Atlantic Ocean. This would take it away from production facilities in the Northern Gulf of Mexico near Louisiana and Texas. This would discourage bulls from taking speculative long positions.

Meanwhile, natural gas prices could actually fall along with demand if the storm causes power outages across Florida. No power, no air conditioning, no demand. That could be bearish for prices.

A dramatic shift to the West that puts it well into the Gulf of Mexico could develop into something bullish, but right now that’s not how it looks.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Rally Ahead of Inventory Report

 

Natural gas prices moved higher on Wednesday as tropical cyclone number 9, heads toward the Caribbean. The trajectory of the storm is pointing to landfall in the United States, with a target of the west coast of Florida. A shift to the west would put the storm on course to head toward natural gas installation which could generate a supply disruption. Traders now await the Energy Departments inventory report scheduled for Thursday. Expectations are for a 24 Bcf build according to survey provider Estimize. KNG exports increased week over week, reflecting an increase in demand.

Technical Analysis

Natural gas prices surged on Wednesday, rising nearly 2% as the August contract expired. The September contract ran into resistance near a downward sloping trend line that comes in near 1.90. A break of that would lead to a test of the July highs near $2. Support is seen near the 50-day moving average at 1.85 which was former resistance. Momentum remains positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

US LNG Exports Rise

US LNG exports increase week over week. Seven LNG with a combined LNG-carrying capacity of 25 Bcf departed the United States between July 16 and July 22, 2020, according to shipping data provided by the EIA.

Natural Gas Price Forecast – Natural Gas Markets Continue to Find Buyers

Natural gas markets have shown a lot of resiliency during the trading session on Wednesday again, after we initially dipped but only to find buyers underneath. We are currently pressing the $1.90 level, and I do believe that we will break above there eventually. Ultimately, I think this is a market that is going to go and test the 200 day EMA, which is near the $1.975 level right now.

Above there, we obviously have the psychologically important $2.00 level, so that is something worth paying attention to as well. In fact, I think that we are essentially trading in a range between the $1.50 level on the bottom, and the $2.00 level on the top. With that in mind, I think that we are likely to see a lot of noise but every time this market dips I think there are buyers, at least in the short term.

NATGAS Video 30.07.20

Longer-term, we may be trying to form some type of bottom for the upcoming winter months, because there have been multiple bankruptcies in this field to bring down supply a bit, and there has also been a significant amount of heat that has driven up demand. That in and of itself could be reason enough to be bullish down the road, but right now I think we are simply in a consolidation phase. The $1.60 level extends down to the $1.50 level, forming a massive “floor in the market” from what I can see. Furthermore, if you look back several years, you can see that the $1.50 level has been crucial multiple times.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Supported by Low Injection Expectations, Contract Expiration

Natural gas futures are edging higher on Wednesday shortly after the regular session. The move is erasing earlier weakness that was driven by a cooler shift in the overnight weather data. Today’s focus is likely to be on the weather and Thursday’s U.S. Energy Information Administration (EIA) weekly storage report although we could see some slight reactions to the Fed announcements and progress on the latest fiscal stimulus deal.

At 14:55 GMT, September natural gas futures are trading 1.878, up 0.014 or +0.75%.

Bespoke Weather Services Outlook

Analysts at Bespoke wrote overnight that the European model trended “materially cooler again” by lowering gas-weighted degree day expectations for next week and “showing a less favorable pattern for notable heat” to return in the following week.

“It had appeared the last couple of days that cooler momentum was coming to a halt, but that is not the case,” the forecaster said. “…Cooler weather next week makes sense given the rise in global angular momentum, marking the atmosphere’s move away from the hotter La Nina base state.”

“Our view is that this is temporary, and above-normal temperatures can regain the upper hand into the middle third of August, which may still work out, but for now, models are less adamant about this.”

Looking Ahead….

Natural Gas Intelligence (NGI) is reporting that Energy Aspects issued a preliminary estimate for an 18 Bcf injection for the week-ending July 24 in this week’s Energy Information Administration (EIA) storage report.

“Other predictions for Thursday’s EIA report have been pointing to an injection in the 20s Bcf range. A Bloomberg survey as of early Wednesday showed a median prediction of 23 Bcf based on six estimates ranging from 18 Bcf to 30 Bcf. NGI’s storage model predicted a build of 24 Bcf”,  Natural Gas Intelligence, reported.

National Hurricane Center

Hurricane Hype

Believe it or not, I saw that an analyst said the market went up on Tuesday because of Tropical Cyclone Nine in the Atlantic Ocean that had a 90% chance of cyclone formation over the next 48 hours, according to the National Hurricane Center (NHC).

According to the NHC, “On the forecast track, the system will move near or over Puerto Rico tonight, near or over Hispaniola on Thursday, and near or over southeastern Bahamas on Friday.”

This storm is nowhere near the Gulf of Mexico and especially production facilities in Texas and Louisiana so I don’t know where this guy is getting his information. Even if it hits Florida, demand is likely to go down not up.

Keep an eye on it, but don’t react to it until there is more information available about its likely path.

Daily Forecast

Today’s reversal to the upside is primarily being fueled by the low injection estimates and position-squaring ahead of the EIA storage report. Furthermore, we have a contract expiration this week which usually causes volatility.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Rise as Tropical Depression 9 Forms

 

Natural gas prices moved higher on Tuesday bucking up against resistance. Fear of a tropical storm moving into the Gulf of Mexico generated higher prices and increasing volatility. Tropical depression number 9, has formed into the Atlantic and has a 90% chance of turning into a tropical cyclone in the next 48-hours according to the National Oceanic Atmospheric Administration. The weather is expected to remain warmer than normal on the coasts and cooler than normal in the mid-west according to NOAA.

Technical analysis

Natural gas prices moved higher on Monday climbing nearly 4%. Resistance is seen near the 50-day moving average at 1.80, while support is seen near the 10-day moving average at 1.73. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Injections into Storage are Slowing

Last week the EIA reported that net injections into storage totaled 37 Bcf for the week ending July 17, compared with the five-year average net injections of 37 Bcf and last year’s net injections of 44 Bcf during the same week. Working natural gas stocks totaled 3,215 Bcf, which is 436 Bcf more than the five-year average and 656 Bcf more than last year at this time.

Natural Gas Price Forecast – Natural Gas Markets Bounce from 50 Day EMA

Natural gas markets have rallied a bit during the trading session on Tuesday as the 50 day EMA has offered support yet again. It looks as if we are trying to build up enough pressure to make the next move, and therefore I think it is only a matter of time before we get a better trade. In the short term, it looks as if we will continue to go back and forth and what would be best described as a scalpers type of market. However, I think we still have further to go to the upside, perhaps reaching towards the 200 day EMA at the $1.97 level.

NATGAS Video 29.07.20

When I look at the longer-term chart, I recognize that we are likely to see more of a range bound play between the $1.50 level on the bottom and the $2.00 level on the top. That being said, it also is worth noting that it looks as if we are trying to form some type of basing pattern, perhaps giving an opportunity for the market to rally into the wintertime when we finally get to this point.

If we could break above the $2.00 level it is likely that we could go much higher, and with the massive amount of bankruptcies that we are seeing, it is likely that we will see supply drop eventually. Beyond that, we also have massive amounts of heat in the United States that have been driving up the demand for the commodity at the same time. Longer-term though, we still have an oversupply issue. This will continue to chop back and forth.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Stimulus Expectations, Fed Likely Catalysts Behind Rebound

Natural gas futures are rebounding on Tuesday from yesterday’s setback that was fueled by the emergence of cooler temperatures due to the impact of the passing hurricane in the Gulf of Mexico. Although Hurricane Hanna failed to generate any noticeable damage to production facilities, it was powerful enough to sweep away some of the heat-related demand in the area, at least temporarily.

Natural Gas Intelligence reported that Bespoke Weather Services less intense heat moderating cooling demand in coming days.

“The bulk of the cooler changes come in the central U.S., running from the Plains over into the Midwest, the forecaster said. “This is the region where models have had the highest hot bias over the last several weeks. Total demand remains forecast to be above normal for the 15-day period as a whole, but not by much, as the intensity of the pattern has fallen well off levels seen for most of this month to date.”

Bespoke said August temperatures are expected to climb above normal for the month overall, but projections through the first third of the month do not show any “risks for strong heat” and gas-weighted degree day levels “begin to decline after the first few days of August, so it is likely that we have seen peak heat on the national level, in absolute terms.”

Short-Term Weather Outlook

According to NatGasWeather for July 28 to August 3, “Showers continue along the Gulf Coast with highs of mid-80s. A second system continues across the Midwest with showers and pleasant highs of 70s-80s. The rest of the U.S. is quite hot with mid-90s over much of the South and East including major Northeast cities. It’s also hot over the West and Northwest with 90s and 100s, aiding strong national demand. However, cooling over the Midwest will reach the Northeast Wednesday – Saturday, easing national demand.

Daily Forecast

With the weather looking a little less-friendly over the short-run, and coronavirus cases still threatening to shut down parts of the country, we’re going to go out on a limb and say today’s early short-covering rally may be getting fueled by expectations of another round of fiscal stimulus by the end of the week, and an anticipated dovish message from the U.S. Federal Reserve.

This news could provide support over the near-term and may be just enough to spook a few of the weaker shorts out of the game, but we’re not likely to see a prolonged rally unless we see heat-related demand like we saw in July and the coronavirus case curve starts to flatten.

We could see a rally into $1.785 to $1.848 today. That’s a key retracement zone. But things are likely to get too exciting on the upside until there is a close over $1.848. This would indicate the buying is getting stronger.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Slide as Hanna Fades

Natural gas prices eased on Monday as Tropical Storm Hanna faded as it hit the Texas coast. There is one disturbance in the Atlantic which has a 70% chance of becoming a tropical stork according to NOAA. Tropical storm Gonzalo has also faded. The weather is expected to be warmer than normal for the next 2-weeks which should help buoy demand.

Technical Analysis

Natural gas prices declined on Monday dropping nearly 4% after running into resistance near the 50-day moving average at 1.81 on Friday. Support is seen near the 10-day moving average at 1.73. Medium-term momentum has recently turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal.

Demand Rises in Latest Week

Total U.S. consumption of natural gas rose by 1.0% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 0.8% week over week. Industrial sector consumption remained unchanged, averaging 20.4 Bcf per day. In the residential and commercial sectors, consumption increased by 4.1%, but remains relatively low. Natural gas exports to Mexico decreased 0.7%.

Natural Gas Price Forecast – Continue to Find Buyers Even on Down Day

Natural gas markets pulled back just a bit during the trading session on Monday, as we continue to see the market try to reach towards the $2.00 level. We are above the 50 day EMA, so that of course in and of itself can be a bit bullish. With that in mind I like the idea of buying short-term pullbacks with a potential push towards the previously mentioned $2.00 level. To the downside, if we did break down below the 50 day EMA then I think that the $1.70 level starts to come in as support. After all, natural gas usage is up in the United States as temperatures have been extraordinarily hot.

NATGAS Video 28.07.20

Furthermore, we have a lot of bankruptcies out there and as we are at essentially a crossroads when it comes to the longer-term outlook for the industry, with supply likely coming down in the future. This does not mean that we get some type of major breakout, just that the worst of the selling pressure is probably over. Because of this, I anticipate that we will drift towards the 200 day EMA, which is currently sitting just below the $2.00 level above. I think that this market is essentially in a major range, between the $1.50 level on the bottom and the $2.00 level above. That being said, the question is whether or not it will end up being a bit of a base for the wintertime, as that could bring in higher prices?

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Weekly Forecast – Bulls Hoping for Robust Power Burns to Continue

Natural gas futures finished the week with a slight gain, helped by technically oversold conditions, a friendly government storage report and expectations of continued heat into early August. The news was just enough to scare some of the weaker shorts out of the market, but not nearly enough to change the trend or market sentiment to bullish.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas rose by 37 billion cubic feet for the week-ended July 17. Traders were looking for a sub-100 Bcf storage injection for the four consecutive weeks. The consensus was for a storage injection of 37 Bcf. Analysts polled by S&P Global Platts were looking for an increase of 33 Bcf.

Total stocks now stand at 3.215 trillion cubic feet, up 656 billion cubic feet from a year ago, and 436 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for July 27-August 2:  Remnants of Hannah continue to bring heavy showers over areas of Texas and the Gulf Coast with comfortable highs of low 80s. A weak system is also tracking across the Northern Plains/Midwest with showers and pleasant highs of 70s-80s. The rest of the U.S. is quite hot with mid-90s over much of the South and East, including mid-90s for major Northeast cities. It’s also hot over the West and Northwest with 90s and 100s, aiding strong national demand. However, cooling over Midwest will reach the Northeast mid-week for lighter national demand.”

Weekly Forecast

The charts indicate that a potentially bullish secondary higher bottom may be forming, but whether investors can sustain last week’s gains will be determined by continued strong summer demand. At the end of the week, it was “so far so good” as storage capacity concerns eased and power burns were robust.

Perhaps helping to put a floor on the market over the near-term are reports of signs of an improving liquefied natural gas (LNG) market. Shipbroker

Fearnleys AS noted news reports of fewer U.S. LNG export cancellations heading into the fall and said the trend signals a potential recovery in the making. Perhaps the new massive EU stimulus package announced last week will lead to increased European demand.

Finally, traders surveyed by Bloomberg estimated that between 20 and 30 U.S. LNG export cargoes would not get loaded in September, but that would represent notable and continuing improvement. After all, the number of cancellations for July was 50 and 35-40 for August.

For a look at all of today’s economic events, check out our economic calendar.