Natural Gas Fundamental Forecast – July 19, 2016

Natural Gas added 20 points as traders bought up the cheaper commodity after it fell last week. The commodity is trading at 277.60 well below the almost $3 level just two weeks ago. Summer temperatures are increasing demands but production and storage remain near record highs. Electricity production from natural gas-fired power plants is expected to reach a record high this year, as the fuel source remains cheaper than coal, according to a government report.

In total, natural gas-fired plants will provide 34% of the country’s electricity this year, the Energy Information Administration (EIA) said. Coal-fired plants, nuclear and renewables follow with 30%, 19% and 15%, respectively.

The cost of natural gas has dropped dramatically in recent years as a result of new technologies that have opened up vast new areas in the United States to drilling, vastly increasing production. As recently as 2010, 42% of the electricity mix came from coal and 25% from natural gas.

Last week changes in positions were dominated by hedgers. Hedge buyers and sellers made large purchases and sales that offset one another. Hedge profit-taking may have motivated hedge sellers, while hedge losses may have motivated hedge buyers to reduce their hedges. Speculators maintained their positions in large part.

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

July 14 – July 20: Hot high pressure continues dominating the southern and eastern US with widespread 90s to 100s, including all of Texas. However, a cool front with heavy showers and powerful thunderstorms will sweep across the northern US the next several days with moderate cooling. Over the NW, systems off the Pacific will keep conditions cool, but still hot across the SW. Early next week, hot high pressure will strengthen to bring hot conditions over much of the country, with near record breaking heat over the Plains into the Midwest where mid-90s to 100s are expected, while also into the 90s along the East Coast. Overall, nat gas demand will be HIGH the next few days, dropping to MODERATE Fri-Sun, then HIGH-VERY HIGH.

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)