Natural Gas Fundamental Analysis – week of August 1, 2016 -Forecast

Natural Gas soared this week on lower inventories and higher temperatures to end at 2.858 with a gain of almost 3%. Updated weather models suggest that temperatures will be warmer than normal between July 29–August 4, 2016 in the most parts of the US. However, moderate temperatures should be experienced in the northern and central parts of the US next week.

Around 50% of US households use natural gas for heating and cooling. Hot summer weather drives the demand for gas-fired electricity generation to power air conditioning. The rise in demand impacts inventories. We’ll learn more about US natural gas inventories in the next part of this series.

The Commodity Weather Group reported that US weather was the hottest so far this summer for the week ended July 22, 2016. Cooling degree days were 14% higher than the 30-year average for this time of year.

The U.S. Energy Information Administration reported that temperatures in the Lower 48 states averaged 77 degrees for the week ended July 21, 2016. This is two degrees higher than the temperatures for the week ended July 14, 2016.

For the week ended July 21, 2016, temperatures were one degree higher than normal, compared to the corresponding period in 2015. The summer season will end in about five weeks.

July 29 – Aug 4: Hot high pressure continues dominating much of the US with widespread 90s to 100s, including all of Texas, although scattered showers and thunderstorms will ease high temperatures a few degrees. Although, cooling over the north-central US/Great Lakes through the weekend will ease nat gas demand to only slightly above normal levels due to areas of showers and thunderstorms. It’s also become quite warm over the Northwest while remaining hot over California and the West. Early next week, the hot ridge will return to the northern and eastern US with temperatures from Chicago through the Ohio Valley warming back too near 90°F. Overall nat gas demand will be HIGH the next 7-days, locally MODERATE Great Lakes.

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