Natural Gas Weekly Fundamental Analysis – week of May 30, 2016

Natural Gas rallied this week to trade at 2.143 gaining 5% as summer demand increased. On Thursday, in their weekly stockpiles update, the US Energy Information Administration reported that natural gas stockpiles grew by 71 billion cubic feet last week, topping the 68 bcf addition analysts surveyed by the Wall Street Journal were expecting. While it was a modest miss, with natural gas stockpiles sitting well above the prior five-year average, even the slightly larger addition was taken as bearish.

Natural gas futures fell 1.5% to $1.963 per million British Thermal Units on Thursday. June natural gas futures have now given back most of their early spring gains. The June contract expired at trading settlement; July futures are now the most-active contract. July futures fell by 1.4% on Thursday. Natural gas prices touched a 17-year low in March, then rallied 33% through the end of April amid a late season cold snap. Prices have since fallen on mild weather.

The natural gas market could face significant challenges this fall if spring and summer storage additions max out storage capacity. This is a real possibility with natural gas stocks sitting about 40% above the prior five-year average. If the market enters the next peak-demand season with such lofty supplies, it would take a very cold winter to deplete stocks, and without this, we could expect another year of depressed prices. Before that; however, there is hope that a hot summer will boost electricity demand to power air conditioners, eroding stockpiles and putting the market in a more balanced state.

May 27 – June 3: Weather systems will cover large stretches of the US the next seven days with heavy showers and thunderstorms. Although, temperatures will remain warm over the Great Lakes and Northeast with highs into the 70s and lower 80s, mid-80s to lower 90s over the southern US. The West will gradually warm through the weekend with highs also warming into the 70s and 80s, except the NW. Overall, an active Spring pattern continues, although warm East of the Rockies into next week with mainly 70s to 80s to bring LOW nat gas demand the next 7 days. (natgasweather.com)

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Economic Events: (GMT)

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)