Natural Gas Fundamental Forecast – May 23, 2016

Natural Gas dipped 7 points after the weekly inventory report released yesterday showed a surprise gain in stocks. NG is trading at 2.032. the US Energy Information Administration reported that US natural gas stocks increased by 73 billion cubic feet for the week ending May 13. Analysts were expecting a storage addition of around 78 billion cubic feet. The five-year average for the week is an injection of around 91 billion cubic feet.

Natural gas traded flat in advance of the EIA’s report, at around $2.00 per million BTUs, and traded unchanged shortly after the data release. While the increase was less than analysts expected and below the five-year average, due to a well-supplied market, any storage additions that are even somewhat near expectations are being digested as a bearish factor for the market. Natural gas futures are down about 7% from a week earlier. Futures have been hit by mild weather across much of the US.

The best bet for a near-term increase in prices is a sharp decline in inventory injections, over a period of time, or a hot summer, which will boost natural gas demand for electricity generation to power air conditioners. In the afterhours session, the commodity is gaining some momentum on the smaller-than-expected storage addition.

“Today In Energy” report said that natural gas-fired power generation increased 19% in 2015.This year, natural gas-fired generation is forecast to exceed coal generation in the US as the country retires coal plants and turns to more environmentally friendly natural gas for power generation. Natural gas’s recent price decent has also impacted the increase in demand for the commodity. Growth in natural gas-fired generation capacity is expected to continue over the next several years, as 18.7 gigawatts (GW) of new capacity comes online between 2016 and 2018.

Natural Gas Weekly Weather Outlook

May 18-24th: Numerous weather systems will impact the US this week with heavy showers and thunderstorms. Numerous weather systems will impact the US into next week with heavy showers and thunderstorms. Temperatures will moderate over the Great Lakes and northeastern US into the upper 60s and 70s over the coming days, while it will remain warm over the southern US where mostly 70s and 80s are expected, but with limited coverage of 90s due to heavy showers. For the West, it will remain warm and unsettled until cooling arrives this weekend. Overall, an active Spring pattern will continue with mostly upper 60s to 80s, but still with areas of heavy rainfall, particularly over the southern 2/3rd of the country, but with nat gas demand easing this weekend into next week to fairly LOW levels.

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)