Natural Gas Price Fundamental Daily Forecast – Market Edges Lower on Mild Weekend Temperature Forecast

Natural gas futures fell on Friday as investors booked profits ahead of the weekend on fresh uncertainty generated by the latest weather patterns. Rather than guess at the weekend results, traders decided to take to the sidelines instead of risking a potential gap lower opening on Monday if the weekend weather came in milder than expected. According to Natural Gas Intelligence (NGI), traders were focused on a near-term shift in weather that is expected to usher in a reprieve from the oppressive heat that has defined the summer to date over much of the Lower 48.

On Friday, September natural gas futures settled at $3.914, down $0.145 or -3.57%.

NatGasWeather Short-Term Outlook

“National demand will ease to much lighter levels” over the coming week “as weather systems sweep across much of the eastern half of the U.S. with highs of upper 60s to lower 80s,” NatGasWeather said. The firm projected the coolest conditions across the Great Lakes and Northeast. “It will still be hot next week over the West and Plains, including much of Texas, but not enough to counter” the comfortable conditions in the East.

Higher Production Coming?

NGI is reporting that Texas Eastern Transmission Co. (Tetco) notified shippers ahead of trading Friday that it had received approval from federal regulators to return its 30-inch diameter system to full operating pressure, with capacity expected to increase by roughly 0.5 Bcf/d starting in the coming week.

Bespoke Weather Services said this would “have some impact on Henry Hub pricing specifically.” However, the firm doesn’t see the restored capacity “significantly affecting the supply/demand balance,” and it anticipates a return of upward pressure on prices in August.

“Production estimates held around 91.5 Bcf on Friday, shy of the 93 Bcf or higher that Bespoke has said may be needed to keep pace with demand that has been driven by both domestic cooling needs – particularly in the drought-stricken West – and robust levels of liquefied natural gas (LNG) activity. LNG feed gas volumes consistently approached 11 Bcf over the past week, putting export activity near capacity levels,” NGI wrote.

Short-Term Outlook

Although prices struggled last week, it’s not always about heat driven rallies in the summer. Most professionals put the emphasis on low supply heading into winter. If the U.S. starts the winter heating season under supplied then prices are likely to soar if it gets extremely cold.

As far as the summer heat is concerned, sure prices rise when there is intense heat, but production between the end of summer and the start of winter can help increase supply. This is why cold weather rallies are often the most dramatic if the heating season starts undersupplied.

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

Natural Gas Weekly Price Forecast – Natural Gas Give Up Early Gains for the Week

Natural gas markets initially rally during the course of the week, breaking out well above the $4.00 level, only to sell off and breakdown. All things being equal, this is a market that I think will continue to see a lot of upward pressure over the longer term, but we are starting to see temperatures cool off a little bit in the United States, so that could drive down demand. Longer-term though, we still have the heat wave coming back and therefore I think buyers will return. This little bit of a pullback might be a nice opportunity to get involved at a better price, and that is how I plan on playing this market.

NATGAS Video 02.08.21

If we can break above the top of the candlestick from the week, then it allows the market to go much higher. At that point, the market is likely to go looking towards the $4.40 level. That is the measured move from the previous consolidation area and the bullish flag that shows up on the daily chart. With that being the case, I think it all the points to higher levels, but this little bit of a pullback should be a nice buying opportunity based upon value as it returns. It is not until we break down below the $3.40 level that I would be a seller of this market and at that point in time I would probably become rather aggressive. In general, this is a market that I believe continues to see upward momentum but given back some of the most recent impulsive move would not be a huge surprise.

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

Natural Gas Price Forecast – Natural Gas Selloff Into the Weekend

Natural gas markets continue to consolidate around the $4.00 level, as we have pulled back from there, but you can see that the market has been in a little bit of a consolidation range between $3.80 and $4.20. At this point, the $4.00 level is essentially the “fair value” of the market right now. I would also point out that just below at the $3.80 level it is the top of the bullish flag, which measures for a move to the $4.40 level.

NATGAS Video 02.08.21

You should also take a look at the massive consolidation area that we broke out of previously with the $2.40 level underneath has offered massive support, and the $3.40 level has been massive resistance. That measures for a $1.00 move from the breakout price of $3.40, so it all kind of comes together at the same time. That being said, it should be noted that the natural gas markets have been seeing a bit of a boost due to the idea of more demand coming out due to the heatwave. As long as that he wave is still around, that is going to drive up pricing over the longer term.

All that being said, it is not a huge surprise to see a little bit of a pullback from the round figure, because after all a lot of technical traders and options barriers tend to gravitate towards these areas. Ultimately, this is a market that I think is going to offer a little bit of value underneath, thereby offering the opportunity of value hunters to get back into the marketplace.

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

Oil Price Fundamental Daily Forecast – Price Action Indicates Traders Believe Demand Will Outstrip Supply

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading relatively flat on Friday in a lackluster trade as investors do a little position-squaring ahead of the weekend following a volatile, but profitable week.

The catalyst behind this week’s gains has been reduced to the simplest of terms:  bullish traders believe that demand will continue to outstrip supply until at least the end of the year.

At 13:15 GMT, September WTI crude oil futures are trading $73.63, up $0.01 or +0.01%, and October Brent crude oil is at $75.13, up $0.03 or +0.04%.

The week began with a steep sell-off due to concerns over demand destruction as bearish traders increased bets the surging coronavirus delta-variant would slow down the pace of global economic growth.

After a plunge on Monday, buyers stepped in to successfully stop the price slide because they believe that demand will continue to grow the next four months, while vaccinations are expected to alleviate the impact of a resurgence in COVID-19 infections across the globe.

Although buyers and sellers battled it out for two sessions earlier in the week, those with a bullish outlook eventually prevailed when private industry and government inventories data confirmed the strong demand.

The case for stronger demand was further strengthened on Wednesday when the U.S. Federal Reserve confirmed that economic progress was being made. The supply picture even became a little rosier after a story circulated that progress in talks between the United States and Iran over a nuclear deal had stalled, further pushing forward an additional supply from the rogue nation.

Daily Forecast

Although the price action is a little mixed on Friday, the market remains underpinned. This is pretty clear evidence of the presence of buyers even as coronavirus cases rise and parts of the world revert back to lockdowns and restrictions that are not as harsh as we saw during the peak of the pandemic year in 2020. This also offers further evidence that bullish traders believe that higher vaccination rates will keep the new surge under control.

“The oil market no longer appears to be viewing the issue of the Delta variant with quite the same alarm as it was at the beginning of last week,” said Commerzbank analyst Carsten Fritsch.

“There is confidence that the ongoing vaccination campaigns in the industrialized countries will prevent any reintroduction of widespread mobility restrictions,” he added.

“Delta is a risk, but is it going to derail demand growth in the second half?  We may not see that,” said Commonwealth Bank commodities analyst Vivek Dhar.

This bullish theme is likely to carry over into next week with the next major challenge for traders – the fair pricing of crude oil – with OPEC+ expected to begin upping production by 400,000 barrels per day on August 1.

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

Natural Gas Price Fundamental Daily Forecast – Despite Bullish Fundamentals, the Market is Lower for the Week

Natural gas futures are trading lower early Friday amid profit-taking and position-squaring ahead of the weekend. According to NatGasWeather, the heat is expected to taper some in the coming days, which may be one of the reasons for the early weakness.

“National demand will be much lighter this weekend and next week as a series of weather systems over Canada advance aggressively across the eastern half of the U.S. with comfortable highs of 70s to mid-80s,” the firm noted.

At 06:57 GMT, September natural gas futures are trading $3.970, down $0.089 or -2.19%.

On Thursday, the futures contract jumped 2.32%, helped by strong fundamentals and a bullish government storage report. The storage surprise reminded investors that there is a supply/demand imbalance that could create problems this winter.

Weekly US Energy Information Administration Storage Report

The U.S. Energy Information Administration (EIA) reported Thursday that domestic supplies of natural gas rose by 36 billion cubic feet for the week-ended July 23. Ahead of the report, NGI wrote that this week’s EIA storage report was expected to show an injection into storage in the low 40s Bcf.

NGI also reported a Reuters poll found projections ranging from a build of 33 Bcf to 52 Bcf, with a median injection of 42 Bcf. Results of a Bloomberg survey showed estimates spanning 34 Bcf to 49 Bcf, with a median of 41 Bcf and a Wall Street Journal survey produced estimates from 39 Bcf to 47 Bcf with an average of 43 Bcf. The NGI model predicted a 49 Bcf injection.

Total stocks now stand at 2.714 Tcf, down 523 Bcf from a year ago and 168 Bcf below the five-year average, the government said.

Daily Forecast

Today’s early weakness has turned the market lower for the week. Given the bullish fundamentals including tight supply, low production and solid liquefied natural gas (LNG) demand, this move suggests that traders think the market is overpriced and may be due for a short-term pullback.

Daily September Natural Gas

Technically, the main trend is up, but momentum has been trending lower since Monday. A trade through $4.165 will signal a resumption of the uptrend. The main trend will change to down on a move through $3.154. This is highly unlikely however.

The minor trend is down. This is controlling the momentum. A trade through $3.837 will indicate the selling pressure is getting stronger.

The nearest support zone is $3.869 to $3.799. This zone stopped the selling on Wednesday at $3.837.

On the upside, the resistance comes in at $4.001 to $4.040. Trader reaction to this zone could determine the direction of the market on Friday. Look for a strong tone to develop on a sustained move over $4.040, and this week’s weak tone to continue on a sustained move under $4.001.

Buyers could return if the price is right, especially with NatGasWeather predicting heat intensifying August 6-11 with most of the Lower 48 warming back above normal with highs of mid-80s to 100s for a return to strong national demand.

“The big picture still looks bullish” for futures “and could be aided by any hotter weather shift,” Bespoke Weather Services said. “We say it over and over again, but until production can get to 2021 highs, it is difficult to see enough loosening in supply/demand balances to make the market more comfortable with the storage situation.”

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

Natural Gas Price Prediction – Prices Rise on Weak Inventory Build

Natural gas prices continued to rally on Thursday following the Energy Information Administration’s report on inventories. The weather is expected to be warmer than average on the West Coast and cooler than average in the  North East for the next two weeks. There are no anticipated disturbances to become tropical cyclones in the Atlantic or Gulf of Mexico over the next 48-hours. Production declined in the latest week.

Technical Analysis

Natural gas prices were higher on Thursday rising more than 3%. Support is seen near the 10-day moving average near 3.92. Resistance is seen near the July highs at 4.19. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a sliding trajectory that points to consolidation.

Inventories Rise Less than Expected

According to the EIA, natural gas in storage was 2,714 Bcf as of Friday, July 23, 2021. This build represents a net increase of 36 Bcf from the previous week. Expectations were for inventories to rise by 47 Bcf according to survey provider Estimize. Stocks were 523 Bcf less than last year at this time and 168 Bcf below the five-year average of 2,882 Bcf. At 2,714 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Natural Gas Look Ready to Continue Bullish Momentum

Natural gas markets have rallied a bit during the trading session on Thursday to show signs of life again and threaten the $4.00 level. If we can break above the highs of the Wednesday hammer, that would be a bullish sign and could send this market much higher. When you look at the overall attitude of the market, it has been bullish for some time and of course we had broken out of a major consolidation area. The $2.40 level underneath was massive support while the $3.40 level was massive resistance. That area measured for a $1.00 move, which extrapolates to the $4.40 level.

NATGAS Video 30.07.21

Speaking of the $4.40 level, it is also an area where we had seen a lot of massive resistance previously. Furthermore, there is a bullish flag that we had broken out of recently and have now just retested, so it should signal that we are going to go towards the $4.40 level based upon the “measured move.” All things been equal, this is a market that I think continues to go much higher due to the heat wave in the western part of the United States, driving up quite a bit of demand.

Ultimately, that he wave seems as if it is going to be somewhat unforgiving, so I think that this move will continue going forward. Given enough time though, once that he wave dissipates a bit, natural gas markets may be the first place in the commodity sector that you see weakness.

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

Natural Gas Price Fundamental Daily Forecast – Supported by Renewed Weather-Driven Demand in August

Natural gas futures are trading flat shortly before the release of the latest weekly government storage figures at 14:30 GMT. Ahead of the report, the market is being supported by expectations of strong weather-driven demand and steady export activity. This, despite a steep sell-off at the start of the week due to profit-taking, volatility associated with the expiration of the August futures contract and a slight shift toward lower cooling demand.

At 11:08 GMT, September natural gas futures are trading $3.967, unchanged.

Short-Term Weather Forecast

NatGasWeather said that heat is still expected to taper some in coming days. “National demand will be much lighter this weekend and next week as a series of weather systems over Canada advance aggressively across the eastern half of the U.S. with comfortable highs of 70s to mid-80s,” the firm noted.

However, the forecaster also said Wednesday, protections show heat intensifying August 6-11 as most of the Lower 48 “warms back above normal with highs of mid-80s to 100s for a return to strong national demand, Natural Gas Intelligence (NGI) reported.

Liquefied Natural Gas Exports Hovering Near All-Time Highs

NGI also reported that LNG export levels are holding strong this week just shy of 11 Bcf/d – a level near all-time highs. LNG exports to fuel cooling needs in Asia and Europe are soaking up supply and feeding imbalance worries. Estimates this week showed production around 91 Bcf, below recent highs and well below levels prior to the pandemic. The divergence between demand and output has provided price support for futures.

Weekly US Energy Information Administration Storage Report

NGI wrote that this week’s EIA storage report, covering the week-ending July 23, is expected to show an injection into storage in the low 40s Bcf.

NGI also reported a Reuters poll found projections ranging from a build of 33 Bcf to 52 Bcf, with a median injection of 42 Bcf. Results of a Bloomberg survey showed estimates spanning 34 Bcf to 49 Bcf, with a median of 41 Bcf and a Wall Street Journal survey produced estimates from 39 Bcf to 47 Bcf with an average of 43 Bcf. NGI model is predicting a 49 Bcf injection.

Daily September Natural Gas

Daily Forecast

Ahead of the EIA report, the deficits, combined with ongoing demand, are fueling the imbalance concerns.

“The big picture still looks bullish” for futures “and could be aided by any hotter weather shift,” Bespoke Weather Services said. “We say it over and over again, but until production can get to 2021 highs, it is difficult to see enough loosening in supply/demand balances to make the market more comfortable with the storage situation.”

Technically, the main trend is up, but momentum has been trending lower since Monday. A trade through $4.165 will signal a resumption of the uptrend. The main trend will change to down on a move through $3.154. This is highly unlikely however.

The minor trend is down. This is controlling the momentum. A trade through $3.837 will indicate the selling pressure is getting stronger.

The nearest support zone is $3.869 to $3.799. This zone stopped the selling on Wednesday at $3.837.

On the upside, the resistance comes in at $4.001 to $4.040. Trader reaction to this zone could determine the direction of the market on Thursday. Look for a strong tone to develop on a sustained move over $4.040, and this week’s weak tone to continue on a sustained move under $4.001.

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

Natural Gas Price Prediction – Prices Rebound Ahead of Inventory Data

Natural gas prices rebounded on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 47 Bcf build in stockpiles according to survey provider Estimize. This follows last week’s smaller than expected 49 Bcf build.  The weather is expected to be warmer than average on the West Coast and cooler than average in the  North East for the next two weeks. There are no anticipated disturbances to become tropical cyclones in the Atlantic or Gulf of Mexico over the next 48-hours. Production declined in the latest week.

Technical Analysis

Natural gas prices were higher on Wednesday, rebounding following Tuesday’s losses. Support is seen near the 10-day moving average near 3.89. Resistance is seen near the July highs at 4.19. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal in oversold territory. The fast stochastic has moved from above 80 (overbought) to 65, reflecting accelerating negative momentum. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a sliding trajectory that points to consolidation.

 

U.S. Supplies Declined in Latest Week

U.S. total supply of natural gas declines slightly this week. According to data from the Energy Information Administration average total supply of natural gas fell by 0.1% compared with the previous report week. Dry natural gas production grew by 0.1% compared with the previous report week to average 92.9 billion cubic feet per day. Average net imports from Canada decreased by 3.0% from last week to 5.0 Bcf per day.

Natural Gas Price Forecast – Natural Gas Markets Recover After Initial Selloff

Natural gas markets fell significantly during the course of the trading session on Wednesday to reach towards the $3.82 level, before turning around and showing signs of strength again. That being the case, the market looks as if it is primed to attack the $4.00 level again, which of course attracts a lot of attention in general. All things being equal, the market is likely to continue to see a lot of choppiness in this general vicinity, but it should note that we test the top of the previous consolidation area to turn around and show signs of life.

NATGAS Video 29.07.21

If we can break above the highs from a couple of days ago to make a fresh, new high, then the market is likely to go much higher to reach towards the $4.40 level, which I have projections of based upon the previous consolidation between the $2.40 level on the bottom and the $3.40 level on the top. That measures for that move, just as the bullish flag that we had broken out of significance as well.

In general, this is a market that I think is a “buy on the dips” type of situation more than anything else, and that of course has been the way this market has run for several months. As we continue to have a major heat wave out west in the United States, that makes quite a bit of sense that demand will continue to pick up for natural gas. Furthermore, should also keep in mind that the commodity markets in general have been booming and that of course has had a bit of a “knock on effect” over here in the natural gas market.

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

Natural Gas Price Fundamental Daily Forecast – August Futures Expiration May Be Source of Today’s Volatility

Natural gas futures are bouncing back on Wednesday after closing lower yesterday for the first time in eight session. Prices traded lower early in today’s session before turning higher.

This suggests that there may be something in the weather forecasts that lean toward the hotter side. Whether it’s enough to trigger a resumption of the uptrend is likely to be determined when the midday forecasts are released. Until then continue to expect heightened intraday volatility.

At 13:15 GMT, September natural gas futures are trading $3.978, up $0.036 or +0.91%.

Besides the weather forecasts that currently indicate modestly milder temperatures next week, some traders continue to build a case for higher prices due to overall LNG demand and tighter storage inventories. Traders will learn more about this when the government releases its weekly storage figures on Thursday.

Another factor behind the early volatility could be the expiration of the August futures contract at the close of business today. This often prompts two-sided trading with some booking profits, other squaring losing positions and others rolling into the September futures contract.

Short-Term Weather Outlook

The latest forecast from the National Weather Service (NWS) showed intense heat across much of the Lower 48 Tuesday and through most of the trading week. Hot high pressure spans much of the country, generating highs of 90s to well into the 100s, with lofty temperatures from Dallas up to Chicago and over to New York City.

The current heat has been priced into the market for weeks, however. Currently traders are pricing in the new forecast that calls for high temperatures to drop back into the 80s over swaths of the Midwest and East over the coming weekend and early next week, according to NWS. This could pull domestic weather driven-demand back to normal seasonal levels in early August.

Daily Forecast

According to some, the weakness we are seeing this week is just related to the August futures contract expiration and that the fundamentals remain bullish. Today’s rebound rally certainly suggests that possibility.

Bullish traders believe the market is still underpriced and that positive sentiment, driven by strong summer cooling demand, an expectation of heat pushing into September, robust liquefied natural gas (LNG) levels and relatively light production is a bullish formula for higher prices throughout August and perhaps into September.

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

Climate Activists Challenge Britain’s Support of North Sea Oil and Gas Producers

The legal challenge revolves around tax breaks oil and gas producers receive in order to help cover costs for dismantling and clearing up ageing infrastructure, in what is known as decommissioning.

The case names as defendants the Oil and Gas Authority (OGA) which oversees the North Sea industry as well as the Secretary of State for Business, Energy and Industrial Strategy (BEIS) Kwasi Kwarteng.

The OGA earlier this year said it will focus on “managing the declining production and maximising value” from the North Sea, one of the world’s oldest offshore oil and gas basins, as part of the government’s plans to reduce greenhouse gas emissions to net zero by 2050.

The claimants argue that the decommissioning tax breaks are not consistent with the government’s net zero emissions targets. Many countries offer producers decommissioning tax relief.

“Instead of using public money to prop up the oil and gas industry, the UK should be funding a just transition that retrains workers and builds the low-carbon industries of the future,” Mikaela Loach, one of the three claimants, said in a statement.

The OGA said in a statement that its strategy “which includes net zero requirements on industry, is the primary tool the OGA has to hold industry to account on emission reductions.”

BEIS did not immediately respond to a request for comment.

Royal Dutch Shell and BP, which have both operated in the North Sea for decades, paid no taxes to the British government in 2019 as a result decommissioning tax relief, according to the firms’ tax reports.

(Reporting by Ron Bousso; editing by David Evans)

Summer’s Gasoline Recovery Could Fizzle on Rising Infection Cases

By Stephanie Kelly, Jessica Jaganathan and Bozorgmehr Sharafedin

Gasoline demand in the United States, the world’s top oil consumer, has nearly recovered to 2019 levels following the plunge in travel and business activity during the worst of the pandemic in 2020.

Coronavirus cases worldwide, however, have started to rise after largely falling in May and June, according to the Reuters global COVID-19 tracker https://graphics.reuters.com/world-coronavirus-tracker-and-maps, undermining the recovery.

Gasoline demand in the United States and Europe is hitting a plateau, and those two regions account for roughly a third of global petroleum consumption, making them key to the rebound in oil and refining markets.

Monthly growth in mobility and transport fuel demand are believed to have slowed in June, the International Energy Agency (IEA) said in a July report. [IEA/M]

Currently, the energy watchdog expects global fuel demand to reach pre-pandemic levels by next year, but analysts say that could be pushed further out if coronavirus infections and the slow pace of vaccinations worldwide further entrenches structural changes in demand – including more telecommuting and less air travel.

“We’re still very much actively dealing with new cases here in the U.S. and also abroad, and that is putting greater pull on demand and what was originally anticipated for this recovery process in the middle of the summer for this year,” said Devin Gladden, manager of federal affairs at motorist group American Automobile Association.

The IEA, which represents oil-consuming nations, also said in March that gasoline demand was unlikely to return to 2019 levels, in large part due to a shift to electric vehicles.

Global gasoline demand is expected to total 25.4 million barrels per day (bpd) this year, down 4.5% from 2019 levels, the IEA said in March.

Countries in Asia are restricting movements again, affecting travel patterns. Indonesia, Asia’s top importer of gasoline, is grappling with the worst coronavirus outbreak in Asia. The country, with more than 270 million people, now has Southeast Asia’s biggest caseload, and is extending some restrictions.

The latest update of aggregated travel patterns Google collected from its users’ phones showed https://www.google.com/covid19/mobility retail and recreation visits fell from June 10 to July 22 by 21% in Indonesia and travel to work fell by 33%. Several other countries are dealing with outbreaks, including Vietnam, Thailand and Malaysia.

China’s refineries continue to process oil at high rates, suggesting strong consumption, but the world’s largest crude oil importer just announced a crackdown on the misuse of import quotas, which could cut its demand.

Fuel sales increased in early July in India as motorists took back to the roads after states eased COVID-19-related lockdowns, helping offset declines in other nations. However, crude imports by India, Asia’s second top importer, fell to a nine-month low in June, after the lockdowns and low demand boosted inventories.

EUROPE’S MIXED PICTURE

In Europe, road traffic has started to plateau following gains in May and June. Daily average petrol and diesel sales at sampled filling stations in Britain have stagnated, while travel is declining in Russia.

Europe is one of the top consumers of global oil, taking in about 14% of the world’s petroleum in 2017, according to the U.S. Department of Energy.

“While transportation demand is still improving in many countries, demand-flattening has started in some key consumers and conditions are deteriorating in others,” Standard Chartered analysts said in a note.

England scrapped nearly all COVID-related curbs last week, while in Germany, Chancellor Angela Merkel warned more people needed to be vaccinated against COVID-19 before restrictions could be lifted in Germany.

Infections are rising in the United States, which consumes about a fifth of the world’s oil. U.S. gasoline demand recently reached 9.4 million bpd, near levels not seen since 2019, but some analysts expect that demand to plateau.

Officials in some areas, like Los Angeles, are reinstating precautions like mask mandates due to the rise in COVID-19 cases.

Demand “has been tracking at around 2-3% below 2019 levels. That’s a number you’re going to continue to see,” said Robert Campbell, head of oil products research at consultancy Energy Aspects.

(Reporting by Stephanie Kelly in New York, Bozorgmehr Sharafedin in London and Jessica Jaganathan in Singapore; Editing by Marguerita Choy)

Natural Gas Price Prediction – Prices Slide on Profit Taking

Natural gas prices moved lower on Tuesday, giving back 3.4% after rallying for a 6-consecutive trading session. The weather is expected to be warmer than average throughout most of the United States except for the North East for the next two weeks. There are no anticipated disturbances to become tropical cyclones in the Atlantic or Gulf of Mexico over the next 48-hours. U.S. Exports of LNG continued to grow in the first 6-months of 2021.

Technical Analysis

Natural gas prices moved lower on Tuesday, declining by 3.4% and giving back some of the August contract’s recent gains. Support is seen near the 10-day moving average near 3.87. Resistance is seen near the July highs at 4.19. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal in oversold territory. The fast stochastic has moved from above 80 (overbought) to 65, reflecting accelerating negative momentum. Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a sliding trajectory that points to consolidation.

U.S. Exports of LNG Rise

According to the EIA, U.S. exports of liquefied natural gas continued to grow in the first six months of 2021, averaging 9.6 billion cubic feet per day. This average marks an increase of 42%, or 2.8 Bcf per day, compared with the same period in 2020. During the summer months of 2020, U.S. LNG exports fell to record lows.

Natural Gas Price Forecast – Natural Gas Continues to Struggle at Big Figure

The natural gas markets have fallen again during the trading session on Tuesday as the $4.00 level continues to be a major thorn in the side for traders. At this point in time, a little bit of a pullback makes sense due to the fact that it is such a significant and obvious level to pay close attention to. That being said, I do believe that there is plenty of support underneath that will come into the picture, especially as we approach the $3.80 level. That is where we had broken out from to get to the $4.00 level so it makes a certain amount of sense that we may have to “retest it” in order to be confident in the move higher.

NATGAS Video 28.07.21

Keep in mind that there is a massive heat wave in the United States right now, and that is driving up demand rather drastically. As long as that is going to be the case, it does make a certain amount of sense that this pair will continue to look to the upside over the longer term, but obviously there is probably a certain amount of profit-taking. Beyond that, the large, round, psychologically significant figure does come into effect as well, so I think certain people are going to be more than willing to take profits quickly.

When you look at the longer-term chart, we had previously been bouncing around between $2.40 on the bottom and $3.40 on the top, measuring for a move to the $4.40 level. Furthermore, we had recently formed a bit of a bullish flag, which also measures for a move to the $4.40 level. With all that being said, it does make sense that we will continue to try to get there.

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

Natural Gas Price Fundamental Daily Forecast – Cooler Adjustments in 10 to 15 Day Window Weighing on Prices

Natural gas futures are trading lower shortly after the New York opening on Tuesday as investors booked profits following weather reports calling for reduced short-term cooling demand. Meanwhile, traders are gearing up for what could be a highly volatile trading session due to this week’s front month futures contract expiration.

At 13:40 GMT, September natural gas futures are trading $4.009, down $0.073 or -1.72%.

EBW Analytics Group Predicts Heightened Volatility

Coming off of Monday’s highly volatile trade, the analysts at EBW Analytics Group see more of the same price action following the “major” losses in projected cooling degree days (CDD) in yesterday’s midday weather model runs.

“With options expiring today and contract expiration tomorrow, near-term volatility is likely to remain high,” the EBW analysts said in a note to clients early Tuesday. “With models continuing to shed CDD overnight, though, the price trajectory later this week could reveal a great deal regarding likely price trends in August.”

Maxar Sees Cooler Temperatures

Maxar’s Weather Desk noted cooler changes in both the six- to 10-day and 11 – 15 day periods in its latest forecast Tuesday. For the six- to 10-day, covering Sunday through August 5, the changes were focused on the eastern two thirds of the Lower 48.

“High pressure will be sent southward from Canada and into the Midwest and East, supplying and reinforcing below normal temperatures,” Maxar said. “The feature pushes farther south than in earlier outlooks, likewise sending a frontal boundary southward.”

Cooler adjustments in the latest projections for the 11- to 15-day window, from August 6-10, were focused in the Midcontinent and South, according to the forecaster.

As a result of the large-scale pattern for the period “durable heat should lack in the eastern half, where the forecast is near normal with temperatures,” Maxar said. “Above normal readings favor the West, which has been the case for most of the summer in response to the ongoing drought.”

Daily Forecast

The fact that September natural gas futures didn’t gap higher on Monday after a long weekend was the first sign of weakness. One would expect that during a weather-driven rally, prices would gap after a hot weekend. But traders weren’t looking at today’s heat, but rather 10 to 15 days down the road and that forecast wasn’t bullish enough to trigger a gap or an upside breakout on the technical charts.

According to EBW analysts, prices in the day-ahead market could slide next week, given that the hottest weather of the summer is expected to come to an end later this week. This would put downward pressure on futures prices, they said.

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Natural Gas Price Prediction – Prices Rise on Strong Power Generation Demand

Natural gas prices continued to break out to fresh contract highs but finished well off the peak of the day. Prices hit a new contract high at $4.18 per MMbtu easing to close up 1% for the day. Warmer than normal weather is expected to cover most of the United States over the next 6-10 and 8-14 days. According to the National Oceanic Atmospheric Administration, there is one tropical storm in the Atlantic or Gulf of Mexico that has a 10% chance of becoming a tropical cyclone over the next 48-hours. U.S. consumption of natural gas rose 1% in the latest week.

Technical Analysis

Natural gas prices continued to rally on Monday. The August contract closed at an all-time high for the 6th consecutive trading session. Target resistance is now the 2018 highs at 4.92. Support is seen near 10-day moving average at 3.84. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought. The current reading on the RSI is 79 above the overbought trigger level of 70 which could foreshadow a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line crosses above the MACD signal line. The MACD histogram also generated a crossover buy signal.

Power Generation Drives Demand

Natural gas consumption in the electric power sector drives total consumption higher. Total U.S. consumption of natural gas rose by 1.5% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 3.3% week over week as much of the West and Northern Plains continued to experience higher-than-normal temperatures.

Natural Gas Price Forecast – Natural Gas Markets Give Up Early Gains

Natural gas markets have initially shot straight up in the air during the trading session on Monday, but as you can see ran into a lot of selling pressure just below the $4.20 level. With that being the case, it looks as if the natural gas market is a bit exhausted, as we have fallen all the way back down towards the $4.00 level. With this being the case, it is likely that we will continue to see a little bit of choppy behavior, but at this point time we are still very much in an uptrend.

NATGAS Video 27.07.21

It is worth noting that the $3.80 level is an area where we had broken out of previously, which was the top of consolidation, which is a bit of a bullish flag. That bullish flag measures to reach the $4.40 level, and it may take a while to get there but it certainly looks as if we are going to try. Beyond that, the previous consolidation between the $2.40 level and the $3.40 area measures for a $1.00 move, meaning the $4.40 area.

As long as there are still heat wave issues out in the western part of the United States, it does make quite a bit of sense that we will see further upward pressure on pullbacks, as there is no real sign the market changing anytime soon, with perhaps the lone exception of the fact that we ended up forming a bit of a shooting star. That being said, I still see plenty of buyers underneath, so I am not willing to get aggressive to the downside. If we can break above the top of the shooting star, that would obviously be a very bullish sign.

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

Natural Gas Price Fundamental Daily Forecast – Early Price Action Suggests Cautious Buying, Change in Forecast

Natural gas futures are inching higher in the overnight session on Monday. Although the market pushed through last week’s high, the move took place without much fanfare. Furthermore, the absence of a gap-higher opening following the weekend suggests a possible shift in the near-term weather forecasts toward less-heat. It could also be an indication that all of the bullish news has been priced into the market and traders are waiting for fresh forecasts due at the mid-session later today.

At 09:53 GMT, September natural gas futures are trading $4.055, up $0.013 or +0.32%.

The problem may be in the seven-day forecast from NatGasWeather, which suggests key demand areas may not get as hot as previously expected. On Friday, the forecaster said it anticipated even stronger demand in the week ahead. It looked for the hot ridge over the west-central United States to expand eastward and cover most of the country with highs of 90s or above. “National demand is expected to surge,” NatGasWeather said Friday. However, its new forecast suggests otherwise, which could be the reason behind the early muted trade.

Short-Term Weather Forecast

According to NatGasWeather for July 26 to August 1, “National demand will be strong this week as hot upper high pressure rules most of the U.S. with highs of 90s to 100s, including 95-100 Fahrenheit in Texas.

Slightly cooler exceptions will occur over the Upper Great Lakes and New England as weak systems produce highs of 80s, while very warm to hot with heavy monsoon showers over the Southwest. A stronger weather system with showers and cooler air will push across the Great Lakes and Northeast late in the week and next weekend with highs of 70s and 80s to ease national demand.”

US Energy Information Administration Weekly Storage Report

The EIA on Thursday reported an injection of 49 Bcf natural gas into storage for the week-ended July16, higher than the mid-40s Bcf print analysts reporting to major surveys had estimated.

Ahead of the report NGI reported that a Reuters’ poll of analysts produced estimates spanning builds of 30 Bcf to 60 Bcf, with a median injection of 45 Bcf. A Bloomberg poll landed at a median injection of 43 Bcf, with estimates ranging from 30 Bcf to 48 Bcf. NGI’s model predicted a 30 Bcf injection.

The EIA number was above a 38 Bcf build in the year-ago period and a five-year average injection of 36 Bcf. Total stocks now stand at 2.678 trillion cubic feet, down 532 billion cubic feet from a year ago and 176 billion cubic feet below the five-year average, the government said.

Daily Forecast

I’m not impressed by the early strength on Monday. Although the market has posted a higher-high for a fifth straight session and could close higher for a sixth consecutive day, we didn’t see a higher gap on the opening, which one should expect in a weather market.

Perhaps traders are afraid to chase the market higher at nearly a three-year high. Perhaps all of the weather news has been discounted. Maybe there is a big short-seller blocking the market. It is also possible that the 10-15 day forecast is coming in below expectations and some traders believe the time is right to trim positions or book profits.

I’m not picking a top because we aren’t sure about the mid-day forecasts, but if they come in bearish to slightly bearish, don’t be surprised by a strong reversal to the downside.

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

Less Windy & Not More Sunny: Where 2021 European Gas Prices Get Additional Support From

Given their importance, these two factors have become sorts of Leo Messi and Cristiano Ronaldo for the regional market, pushing other ‘players’ into the background. However, gas contracts have also been supported by this year’s limited electricity generation from key RES.

Amid unfavourable weather conditions, a few countries with a high share of RES in the power supply mix have considerably decreased wind output this year, as compared to 2020. This is particularly the case for Germany, which is the biggest wind energy producer in Europe. The daily average volume of electricity generated by German wind installations dropped by about 20pc in the first seven months of 2021 from the corresponding period in 2020. This far outweighs a 6pc rise for Italy, while wind turbine electricity output in Austria, the largest CEE supplier of power from that source, has declined by 7pc this year.

When summer arrived everywhere in Europe, the situation with renewable energy production should have improved somewhat by higher solar generation, but it did not happen. The total amount of electricity produced from solar energy in Germany, Italy and Austria combined between 1 January and 25 July 2021 was almost identical to that of 2020. By the way, this year’s solar output could even have decreased quite substantially if Europe had not been hit by heatwaves during the last two months.

So far, lower wind power generation, without being offset by solar output, fits perfectly within a larger ‘perfect storm’ picture of 2021 European gas market.

The opinions expressed in this blog are mine only and do not reflect the views of my employer

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