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Natural Gas Price Fundamental Daily Forecast – Firmer than Expected Ahead of Thursday’s EIA Storage Report

By:
James Hyerczyk
Published: May 12, 2021, 18:44 UTC

The upcoming pattern is especially bearish starting this weekend through next week, according to the NatGasWeather.

Natural Gas

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Natural gas futures are trading higher late in the session on Wednesday, supported by short-covering ahead of tomorrow’s weekly government storage report and robust liquefied natural gas (LNG) exports. The market is also recovering from weakness earlier in the week that was fueled by worries about the cybersecurity breach involving Colonial Pipeline Co. The company could restore operations later this week.

At 18:13 GMT, June Natural gas futures are trading $2.973, up $0.018 or +0.61%. (Rollover to the July contract on Thursday).

The strength of the market comes as a surprise since the weather is expected to be comfortable the last two weeks of the month and traders are calling for three consecutive weeks of fairly large builds in the weekly storage reports.

Daily June Natural Gas

Bespoke Weather Services Outlook

Natural Gas Intelligence (NGI) reported that Bespoke Weather Services said the domestic demand outlook is uneven, with near-term demand holding up early this week as cool shots and chilly rains pepper the Midwest and parts of the East. Heating demand is expected to fade by next week, however.

“Things do moderate beginning this weekend” and “we are just looking at near-normal demand through late month,” Bespoke said.

Overnight, the firm removed 2.5 gas-weighted degree days from its projections for the next 15 days.

“Models are back to showing a little more warming from May 20, though not strong enough yet in the right places” to drive higher cooling degree days (CDD), Bespoke said. “Should this trend continue, we would see more CDD show up (not just absolute but versus normal) after day 15, but confidence is lower than average given the tendency for models to be biased too warm in the medium range lately.”

NatGasWeather Outlook

NatGasWeather similarly observed only small changes overnight in terms of degree day expectations, NGI reported.

The American and European models both “held a bearish U.S. pattern” for Friday through May 25 that would see “only localized heat” over southern parts of the country, NatGasWeather said. The American dataset “did tease heat trying to gain territory across the southern and eastern U.S. around May 27-28,” but this will need “more evidence” before it can be expected.

The upcoming pattern is especially bearish starting this weekend through next week, when population centers from the Midwest to the East will see comfortable temperatures, according to the firm.

“The southern U.S. becomes warm to very warm with highs of 80s to 90s,” NatGasWeather said. “However, the coverage and intensity of highs reaching the 90s over the southern U.S. still isn’t expected to be as widespread as needed to intimidate through May 26 and should result in several large weekly builds near or over 90 Bcf.”

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About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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