Natural Gas Fundamental Forecast – May 20, 2016

Natural Gas is trading near its lowest level in months as summer temperatures remain low and supplies are high. Traders will wait for today’s weekly inventory report. In the meantime NG is trading under $2.00 at 1.994 at this writing.  Yahoo printed that the latest weather report suggests that cold weather will continue over the next two weeks in the northern states of the United States. This will drive heating demand, which will lead to a rise in natural gas demand.

However, several parts of the United States may experience mild weather. Half of all US homes use natural gas for heating. Consequently, this could negatively affect natural gas prices, as low demand adds to inventory. Temperatures in the lower 48 states averaged 57 degrees Fahrenheit for the week ending May 13, 2016. The US temperature was 1% below normal and 8% below the same period in 2015. The South Atlantic, East South Central, and Pacific US Census Divisions of the United States reported temperatures that were above normal for the week ending May 13, 2016.

Natural gas demand is highest when temperatures are extreme, and this typically occurs in the winter and summer. With natural gas used for both electricity generation and direct heating, winter demand is the highest. Unfortunately, last winter was mild and this resulted in low demand and near two-decade low natural gas prices. During the spring, storage additions could have a great deal of influence on natural gas prices. While storage additions are necessary so we have enough natural gas for next winter, but if storage additions are too high it could put a great deal of downside pressure on natural gas prices. (Economics Calendar)

Natural Gas Weekly Weather Outlook

May 16-22nd: Numerous weather systems will impact the US this week with heavy showers and thunderstorms. It will be cool over the Great Lakes and northeastern US the next few days in the wake of the weekend cool blast, but then moderating into the upper 60s and 70s by mid-week. It will remain warm over the southern US where mostly 70s and 80s are expected, but with limited coverage of 90s. For the West, it will remain warm and unsettled. Overall, an active Spring pattern will continue with mostly upper 60s to 80s, but still with heavy showers, particularly over TX and the southern US. Simply, the northern and eastern US will drive stronger than normal nat gas demand to open the week, but then with national demand easing later in the week as more comfortable temperatures shift northward. Overall, much of the country will experience LOW nat gas demand this week after being MODERATE the next 2 days.

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)