Natural Gas Fundamental Forecast – May 25, 2016

Natural Gas continued to gain adding 4 points today to 2.203 as we move into the summer demand season.  The summer months often bring higher demand for gas-fired power to run air conditioners, which had helped push prices to a 10-day high in early trading. But Monday’s midday weather forecasts showed cooler temperatures in the southeast than the overnight updates showed, and that weakens demand expectations in the biggest region for gas-fired power, said Zane Curry, a gas analyst at Mobius Risk Group in Houston. (WSJ)

The gas market may need an extreme amount of heat to drive enough demand for air conditioning and gas-fired power to burn off a glut left over from winter, analysts have said. Storage levels as of May 13 hit 2.8 trillion cubic feet, 40% above levels from a year ago and 41% above the five-year average for the same week.

“Storage inventory is still extremely bloated,” Mr. Curry said. “So any time the market sees cool — below normal — temperatures in the southern tier of the country … then you’re going to have a tendency to push prices back to the bottom of the trading range.”

The Wall Street Journal printed an interesting quote that said. “We haven’t had a hot summer in a few years, but if we do get one, people might be shocked about how much gas we use in the summer,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Natural gas is looking more and more like it’s hit bottom.”

Natural Gas Weekly Weather Outlook

May 20-26th: Numerous weather systems will impact the US into next week with heavy showers and thunderstorms. Although, temperatures will gradually warm over the Great Lakes and northeastern US into the upper 60s and 70s, 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, weather systems with cooling will arrive off the Pacific this weekend into next week. Overall, an active Spring pattern continues with mostly upper 60s to 80s, but still with areas of heavy rainfall. Demand the next 7 days will be LOW.

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)