Natural Gas Fundamental Forecast – May 26, 2016

July Natural Gas futures traders attempted to follow-through to the downside early Wednesday, but the move was thwarted by the lack of fresh short-sellers hitting the market, or aggressive counter-trend buyers. Everyone is watching the weather this time of year so the sudden intraday reversal was likely fueled by a change in the forecast.

Earlier in the week, the market broke from 1-week highs after weather experts reduced the chances of hot weather returning to key usage areas. The new forecasts took out the heat and are now showing the strong possibility of cooler temperatures in the southeast.

The market is currently oversupplied following the mild winter, but forecasts for warm temperatures over the next two weeks may lead to the formation of a short-term bottom. Longer-term traders should note the band of support in the 2.800 area and the last main bottom at 2.059 on March 28. This is helping to hold prices in a range along with the resistance at 2.254 to 2.271.

The weather forecasts indicate the market can move in either direction. This likely means the tone of the market the rest of the week will be decided by Thursday’s EIA inventories report. It is expected to show a build of 67 billion which is slightly below last week’s 73 billion reading.

Try to avoid looking at the long-term picture at this time because we are in a short-term weather market. The patterns keep changing which is causing the volatility. We won’t see a trend develop in the natural gas market until there is a long, lingering heat dome formation. Until then, we should continue to see a choppy, two-sided trade.

May 24-30th: Weather systems will impact the NE Coast and central and western US this week with heavy showers and thunderstorms.

Although, temperatures will warm over the Great Lakes and Northeast into the 70s and lower 80s, while in the mid-80s over the southern US except locally 90s over portions of Texas and the Southwest.

The West will be the coolest region with highs of 60s due to the arrival of showers off the Pacific Ocean, although only slightly below normal.

Overall, an active Spring pattern continues, but warmer East of the Rockies this week with mainly 70s to 80s to bring LOW natural gas demand the next 7 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)