Natural Gas Monthly Fundamental Forecast – August 2016

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Published: Jul 30, 2016, 06:45 UTC

Natural Gas ended the month with a loss of over 4% as higher inventories weighed heavily on the price early in the month. NG closed at 2.858 with a gain

Natural Gas Monthly Fundamental Forecast – August 2016

Natural Gas ended the month with a loss of over 4% as higher inventories weighed heavily on the price early in the month. NG closed at 2.858 with a gain of 16.31% on a year to date basis. North American natural gas prices are expected to finally gain some lasting momentum, with the Henry Hub spot forecast to average $2.40/MMBtu in 2016 and rising markedly to $3.30/MMBtu in 2017. Supply will remain constrained due to the unattractive price environment while exports are likely to increase and domestic demand is anticipated to continue rising. The coming winters are expected to spur considerably higher heating demand relative to last winter, which was abnormally warm and natural-gas fired power generation capacity is seen growing extensively through 2018 according to the EIA’s planned start-up schedule.

The increase in natural gas stockpiles was only 17 billion cubic feet, which is the smallest increase in summertime for the past 10 years.

One of the reasons for the small increase was the fact that the eastern seaboard has been having unusually hot weather. More people have been running their air conditioners to combat the heat, so more natural gas is being used to power the AC. The reduced stockpile has some traders concerned this could affect natural gas in the winter, when it becomes the primary fuel for heating homes.

U.S. farmers use natural gas for grain production for drying crops in the bin, and gas serves as the major component for producing nitrogen fertilizers. Forward-thinking corn growers must now add gas prices, along with insects, weeds, and weather, to their watch lists.

SUMMER FORECAST 2016

We will have true summery weather this season. If you love the outdoors, you should be spending more time enjoying outside activities, as summer temperatures will be above normal in most of North America.

In the United States, summer temperatures will be above normal with exceptions in the Southeast, near the Gulf of Mexico, and along the spine of the Appalachians. Rainfall will be below normal in most of the nation’s midsection, which may reduce yields of corn, wheat, soybeans, and other crops grown within this area.

The drought in much of California will likely continue as well, putting additional stress on our food supply.

In Canada, temperatures will be above normal, on average, throughout the entire Commonwealth. Rainfall will be above normal in British Columbia and parts of Quebec and below normal elsewhere.

Hurricane season will be more active than last year’s, with threats along the Atlantic and Gulf regions. The best chance for a major hurricane strike is from late August to mid-September along the Texas and Louisiana Gulf coasts and in early July in Florida. Find out the names of this year’s hurricanes here.

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