Natural Gas Fundamental Forecast – July 26, 2016

Natural Gas gained 16 points to 2.759 as the US became enveloped in a bubble of heat sending temperatures to record highs. The latest weather forecasting models suggest that temperatures will be hotter than normal between July 21 and July 27 in the central, southern, and eastern US. Cities like Chicago and New York will also experience extremely hot weather over the weekend. However, moderate temperatures should be experienced in the western and northwestern 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.

Temperatures in the lower 48 states averaged 77 degrees for the week ending July 14, 2016. This is two degrees more than the temperatures for the week ending July 7, 2016. For the week ending July 14, 2016, temperatures were two degrees higher than normal—compared to the same period in 2015. The central and south Atlantic regions experienced hot weather for the week ending July 14, 2016.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended July 15 rose by 34 billion cubic feet, below forecasts for an increase of 39 billion.

That compared with an increase of 64 billion cubic feet in the prior week, 59 billion a year earlier and a five-year average of 61 billion cubic feet. Total U.S. natural gas storage stood at 3.277 trillion cubic feet, 14.4% higher than levels at this time a year ago and 17.1% above the five-year average for this time of year.

Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.

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

July 22 – July 28: Hot high pressure will dominate much of the US through the weekend with widespread 90s to 100s, including all of Texas. Hot and humid conditions will combine to increase the Heat Index to dangerous levels over large portions of the central, southern, and eastern US the next several days, including into major cities to drive very strong nat gas demand. Over the West, weather systems will keep conditions slightly cool over the NW, but still hot over California and the SW. Early next week, temperatures will moderate north-central US as weather systems over southern Canada arrive. Overall, nat gas demand will be HIGH to VERY HIGH the next 7-days.

FxEmpire provides a wide variety of analysis on a daily, weekly and monthly basis ranging from our exceptional technical analysis as well as our in-depth fundamental analysis along with our daily news and market updates. To get the best understanding of each asset it is important to review the short term daily analysis with the longer term monthly reports. To get email notification when each of these are posted please sign up for our daily newsletter.

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)