Natural Gas Fundamental Forecast – August 9, 2016

Natural Gas dipped 30 points to 2.742 as traders booked profits and the stronger US dollar weighed on the commodities. There are very few days left in summer heating season. A storage drawdown during the gas injection season is practically unheard of. A combination of hot weather and reduced production are primarily responsible for the decrease. Gas producers have been cutting production in an effort to reduce the amount of gas in storage when the heating season begins in November so that gas prices will improve.

High temperatures have dominated across the Lower 48 this week and are expected to push into the heavily populated northeastern United States this weekend, driving up demand for electricity to power air conditioning. Somewhat cooler temperatures are forecast early next week in the northeast, but high temperatures are expected elsewhere across the country. Overall demand is expected to be high for the next seven days.

Stockpiles remain about 13% above their levels of a year ago and about 16% above the five-year average.

Markets went into summer with supply 54% above the five-year average. Last week that was cut to under 19%. And that number should fall further! If we continue this trend, we could end the refill season below average and with the retirement of many coal plants, a cold winter could leave us vulnerable to big time winter price spikes if we get real cold weather. The way things are going, you better get out some sweaters because the era of low natural gas prices may be coming to an end. Make sure you ask for our special presentation on the state of natural gas.

Natural Gas Weekly Weather Outlook (www.natgasweather.com)

Aug 5 – Aug 11: Hot high pressure with highs underneath of upper 80s to 100s covers much of the US besides the northern Plains and Northwest. Above normal temperatures have also pushed into the southern Great Lakes, Ohio Valley, and Northeast. It’s most uncomfortable over the Plains and Mississippi River Valley, aided by humid conditions that are pushing the Heat Index well over 100°+F. After warming east of the Rockies this week, cooler air will sweep across the Great Lakes and Northeast late this weekend into Monday before hot high pressure again restrengthens to claim ground over much of the country besides the West for the rest of the week. Overall nat gas demand will be HIGH the next 7-days.

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