Natural Gas Fundamental Forecast – May 16, 2016

Natural Gas tumbled 52 points to 2.103 after the weekly inventory surprised to the upside and spring temperatures remained pleasant. Bloomberg reported that prices have gained about 30 percent from a 17-year low in March, the biggest advance for the period since 2002, as investors including Greenlight Capital’s David Einkorn bet the market would put a dent in supply. While money managers turned bullish on the fuel last month for the first time since 2014, government forecasts show output climbing for the next seven quarters. Explorers including Cabot Oil & Gas Corp. and EQT Corp. outpaced their own production outlooks.

Drillers are beating estimates as the price collapse forced them to become leaner, producing more fuel with the fewest rigs since at least the 1980s. Gas output from the Marcellus shale in the U.S. East is pushing stockpiles toward an all-time high. A rebound in crude oil prices threatens to boost supplies of gas extracted as a byproduct.

A report from Bloomberg Intelligence said that rising gas inventories could witness lower injection due to below-normal temperatures forecast for the United States into mid-May, boosting heating demand temporarily.

The report also said that natural gas prices are surrounded by oversupply concerns, as inventory levels are 47% above last year’s inventory levels after a mild winter. Consensus estimates expect natural gas inventories to rise by 58 billion cubic feet in the week ended May 6, 2016.

Natural Gas Weekly Weather Outlook

May 10-16th: A weather system with heavy showers and thunderstorms is tracking through the central US with slightly cool conditions. Another weather system is grazing New England also with cooling. The rest of the US is mostly comfortable and dry with highs of upper 60s to 80s, although a little hot over Texas where 90s are expected the next few days before cooling arrives later in the week. A fresh weather system is expected to track into the north-central US late today and Wednesday while tapping some cooler air over southern Canada for a marginal bump in heating demand. Cooler air will then sweep across the Great Lakes and northeastern US Sat-Mon. The western and southern US will be warm over the coming with mostly 70s and 80s. Overall, light nat gas demand is expected this week until a modest increase Sat-Mon over the northern US. Overall, much of the country will experience LOW nat gas demand this week and then MODERATE this weekend.

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)