Natural Gas Fundamental Analysis – August 24, 2015 – Forecast

Analysis and Recommendations:

Natural Gas  tumbled by 38 points to touch a new low in its recent trading range at 2.716 after the release of Thursday’s weekly inventory report.  Natural gas prices hit monthly lows on the slowing demand consensus due to mild weather estimates. The latest forecasting model suggests that mild weather and thunderstorms could be experienced across the northern and central regions of the US over the next week. Mild weather would curb the air conditioning needs and we could see a fall in the demand for natural gas.

The EIA (U.S. Energy Information Administration) will release the weekly natural gas report on August 20, 2015. Last week, the EIA stated that the natural gas stocks rose by 65 Bcf (billion cubic feet) for the week ending August 7, 2015. The estimates of the rising natural gas stocks could add pressure to natural gas prices.

Natural gas producers have steadily increased production this year compared to last, roughly keeping pace with growing demand for the fuel from power producers and chemical plants. The ultimate result has been a stalemate between demand and supply in 2015 — natural gas prices today are about 5 percent lower than they were on Jan. 1.

On Thursday, benchmark natural gas prices rose about 4 cents to $2.755 per million British thermal unit on the New York Mercantile Exchange. As recently as Nov. 2014, prices were as high as $4.489 per million British thermal unit.

Strong production has been the major force keeping prices low.

According to the U.S. Energy Information Administration’s Short Term Energy Outlook, U.S. producers hit a total marketed natural gas production of 78.3 billion cubic feet per day in July, a jump of about 4.4 percent year over year. The EIA estimates that could grow to 81.4 billion cubic feet by Dec. 2016.

AccuWeather US Forecast Outlook:

A hot dome of high pressure will dominate the southern US with temperatures underneath in the upper 80s to lower 100s, although not as hot as recent days. It will be cool over the NW, Great Lakes, and NE through early Friday before the hot ridge expands north and east through this weekend. This weekend into early next week, a cut off low pressure system will bring showers and slight cooling to the southern US, while the hot ridge shifts northward with upper 80s to lower 90s gaining ground. This will result in HIGH demand for cooling over the much of the coming week.

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 up to the data analysis and information in our weekly reports.

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)