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Natural Gas Fundamental Analysis – week of August 29, 2016 – Forecast

By:
Barry Norman
Published: Aug 27, 2016, 05:23 UTC

Natural Gas soared at the end of the week to trade at 2.894 reversing losses after a smaller inventory than expected. The climbing dollar limited gains

Natural Gas Fundamental Analysis – week of August 29, 2016 – Forecast

Natural Gas soared at the end of the week to trade at 2.894 reversing losses after a smaller inventory than expected. The climbing dollar limited gains with the commodity gaining 12% for the week and is a strong buy into the new week. The U.S. Energy Information Administration early Thursday reported that supplies of the commodity rose 11 billion cubic feet for the week ended August 19. That was slightly below the average rise of 18 billion cubic feet expected by analysts polled by S&P Global Platts.

But “a small figure was largely priced in throughout the week and heading into the report, with several of the most recent estimates even seeing a single-digit as a possibility,” Joseph George, commodity analyst at Schneider Electric reported.

“Strong production figures are weighing on the market as well, and holding off an additional rally on top of what we’ve seen in recent days,” he said. “Even though temperatures are expected to remain warm over the next two weeks, continually elevated supply relative to recent months is helping to counter the additional demand.”

The U.S. Energy Information Administration said Thursday that natural-gas stockpiles grew by 11 billion cubic feet last week, less than the 19 bcf expected by forecasters surveyed by The Wall Street Journal. That addition is one-sixth of the average addition for that week of the year.

Inventories stand 12% above the five-year average for this time of year, a much smaller surplus compared with several months ago. That improving balance has been the driving force behind gas-price gains in the spring and summer that keep it hovering near one-year highs, said Peter Donovan, broker for Liquidity Energy in New York.

Aug 26 -Sept 1st: High pressure will dominate the southern and eastern US through next week with temperatures mainly in the upper 80s to lower 90s. Although, it’s expected to remain unsettled over the west-central US into the Midwest through the weekend as weather systems bring showers, thunderstorms, and modest cooling. With warm upper level high pressure strengthening east of the Rockies, nat gas demand will remain stronger than normal. Finally, a tropical system over the Bahamas will approach the eastern Gulf of Mexico this weekend. Overall, nat gas demand will be MODERATE becoming HIGH.

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