Natural Gas Fundamental Forecast – August 4, 2016

September Natural Gas futures are up $0.046 or +1.68% at $2.779. Bullish investors continue to build a support base in anticipation of the return of above normal temperatures, but are waiting for confirmation from this week’s U.S. Energy Information Administration’s inventory report that demand is exceeding supply.

Despite the strong multi-month rally, natural gas prices remain close enough to contract lows to suggest the global supply glut is still exerting bearish pressure on the market. However, they are also trending higher enough to suggest that speculators are expecting a further drawdown in this week’s inventory report.

Analysts forecast that only 10 billion cubic feet (bcf) of gas was added into storage during the extremely hot period ending July 29. That would be the least amount added since 2010.

During the week-ended July 22, just 17 bcf was added, which was also the least for that week since at least 2010, and a build of 41 bcf during the same period a year ago and a five-year average build for that week of 54 bcf.

We could be looking at a sideways trade today as investors prepare for Thursday’s report. Traders aren’t too interested in the historical comparisons, but how this week’s actual results compare to the estimate. An injection below 17 would be bullish. An injection above 17 will likely pressure nat gas prices.

Traders are hoping for lower inventory figures going into the winter season.

Weather Forecast for Aug 2 – Aug 9: Hot high pressure will expand to take ground this week, spreading north and east. However, it will be a slow to arrive along the East Coast as lingering showers from an exiting weather system will keep conditions slightly cooler than normal with highs in the 70s into the 80s.

The western, central, and southern US will be quite hot with widespread 90s and 100s besides the Northwest. After the Northeast becomes very warm late this week with upper 80s to lower 90s, cooling is expected to return late this coming weekend as another weather systems races through. Overall Natural Gas demand will be HIGH the next 7-days.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

WEEKLY

Natural Gas Weekly Update
Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)

Weekly Natural Gas Storage Report
Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)