Natural Gas Fundamental Forecast – June 17, 2016

Natural Gas dipped 8 points as traders booked profits ahead of today’s weekly inventory report. NG is trading at 2.587 well off its bottom under the $2 level just seen a month ago.  Updates from the two widely followed private forecasters: MDA Weather Services and Commodity Weather Group LLC showed that almost the entire United States would see above normal temperatures in the last week of June. High temperatures mean that more homes will use their air conditioning, and increased use of air conditioning will translate into higher demand for electricity. American utilities are using a very high amount of natural gas in their energy mix to generate electricity, therefore, increased electricity demand will mean higher-than-usual demand for natural gas.

Natural gas prices have recovered since hitting a 17-year low earlier in the year, on increased demand and indications production is stabilizing. Prices collapsed in the winter of 2015-2016, after a few years of solid natural gas output preceded a mild winter. Winter is the peak demand period for natural gas.

Even though demand is seeing a seasonal boost, total inventories remain healthy. The U.S. Energy Information Administration will release its latest inventory update on Thursday. Analysts polled by The Wall Street Journal are expecting a 79-billion-cubic-feet addition in the week ended June 10. If that estimate is correct, total inventories will be 3 trillion cubic feet 33% above the prior five-year average for this time of year.

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

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, nat 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)