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Natural Gas Fundamental Forecast – June 16, 2016

By:
James Hyerczyk
Published: Jun 15, 2016, 12:58 UTC

After jumping to a 9-month high on June 9, August Natural Gas futures are consolidating, reflecting a slight change in the short-term weather forecast.

NATURAL GAS

After jumping to a 9-month high on June 9, August Natural Gas futures are consolidating, reflecting a slight change in the short-term weather forecast. The longer-term forecast is calling for continued above-normal temperatures across most parts of the U.S. over the next two weeks. The futures contract is trading at $2.669, up 0.003 or +0.11%.

The U.S. Energy Administration’s storage report slated for release on Thursday is expected to show a build in a range between 60 to 71 billion cubic feet for the week-ending June 10. The low side will be below the prior week’s reading of 65 billion cubic feet. A year ago the report showed an 89 billion cubic feet build. The five-year average is 86 billion cubic feet.

Prices have surged 14% in June as traders increased bets that summertime heat will boost demand for gas-powered electricity to run air-conditioning units, helping to shrink the glut of natural gas. According to the EIA, total natural gas storage stood at 2.972 trillion cubic feet as of last week, 22.2% higher than levels at this time a year ago and 32% above the five-year average for this time of year.

Despite the bullish outlook, bullish traders seem a little tentative after the recent surge. This could be a reflection of an overbought market or general nervousness ahead of the Fed and Bank of Japan monetary policy statements as well as next week’s Brexit vote. A decision to leave the European Union by the UK could put some pressure on natural gas or at least limit gains because it could cause a recession which would curtail demand.

June 14-20th: A fresh cool blast over the northeastern US will keep highs in the 60s and 70s, which is slightly cooler than normal. A second system is tracking into the West with stronger cooling, which will also trigger severe weather over the Plains today.

Although, most importantly, hot high pressure over Texas and the central and southern US will continue to bring widespread highs of 90s to 100s.

A weather system with cooling and showers will eventually arrive into the Southeast late in the week for several degrees of cooling, but overall, very warm to hot conditions will dominate large stretches of the US with the heat then pushing into the West this weekend. Overall, natural gas demand will be moderate to locally 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)

30-Minute Natural Gas

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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