Natural Gas Fundamental Forecast – September 1, 2016

October Natural Gas futures traded slightly higher on Wednesday as investors digested the latest weather data on the storm moving through the Gulf of Mexico. The last price was $2.852, up $0.025 or +0.88%. Last week, speculators drove the market sharply higher, but since August 26, momentum has been to the downside.

Although natural gas prices have sold-off from last week’s high at $2.949, there is still a bid coming in that is providing support. This is likely because of a limited shutdown of offshore natural-gas production.

Currently, there is a storm developing in the Gulf and two tropical depressions in the Atlantic that could develop into tropical storms by the end of the week. If a large storm reaches the Gulf, it could disrupt offshore natural gas-production in the region, reducing supply.

We could actually see a two-sided trade depending on where the storms strike. If it reaches the production rigs then we could see a loss of production which would be bullish for prices. However, offshore production is a small-percentage of overall production so the loss wouldn’t be that great.

If the storms reach land and do enough damage to cause power outages then prices could actually fall because of lower demand.

The point is, traders shouldn’t get too bullish or too bearish at current price levels because there is still too much uncertainty about the storm. This is not a traditional weather market like many commodity markets face from time to time because of the two-sided possibilities.

According to NatGasWeather.com for Aug 30 -Sept 4th: High pressure will dominate the southern and eastern US with temperatures mainly in the 80s to lower 90s.

Although, it’s expected to remain unsettled over the west-central US into the Midwest as weather systems bring showers, thunderstorms, and modest cooling.

A tropical system over the Gulf of Mexico is expected bring rain and gusty winds to the Southeast later this week, while a quick cool blast will impact the NE late this week through the coming weekend. Overall, natural gas demand will be moderate to locally high.

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.

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Natural Gas Weekly Update
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