Natural Gas Fundamental Analysis – August 28, 2015 – Forecast

Analysis and Recommendations:

Natural Gas dipped 15 points to 2.689 ahead of today’s weekly inventory. The entire energy complex remains weak and is being pulled down by low oil prices.  Natural gas production across all major shale regions in the US is expected to decrease for the first time next month.

That’s according to the Energy Information Administration’s (EIA) Drilling Productivity Report (DPR). The DPR forecasts a month-ahead of natural gas and crude oil production for the seven most significant shale formations in the US. Production reached a high in May at 45.6 billion cubic feet per day (Bcf/d) but is expected to decline to 44.9 Bcf/d in September.

The regions are Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica.

Natural gas futures tumbled to an 11-week low as moderating heat forecast for the U.S. will cut air conditioner use and fuel demand from power plants.

Temperatures will be seasonal across most of the lower 48 states Aug. 26 through Aug. 30 following above-normal readings along the East and West coasts over the next five days, according to Commodity Weather Group LLC. The high in Boston on Aug. 27 will be 78 degrees Fahrenheit (26 Celsius), in line with the average, AccuWeather Inc. said on its website.

Gains in gas inventories will accelerate in the coming weeks with the waning summer heat, pressuring prices, according to Societe Generale SA and BNP Paribas SA. Surging production has helped stockpiles climb 21 percent faster than the five-year average since inventories began a seasonal increase in April.

“The weather is coming to an end, the heat is going to go away and we are still quite a ways from heating demand,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “I think that’s why the market is not going up. Production is still at high levels.”

AccuWeather US Forecast Outlook:

August 25-31st: A stronger than normal weather system will bring another round of showers, thunderstorms, and cooler than normal temperatures over the Midwest and eastern US this week, including briefly into portions of the southern US. It will remain warm along the East Coast until the cool front arrives. It will again become hot over Texas and California this week as high pressure strengthens with highs into the 90s and lower 100s. Warmer temperatures will slowly gain ground next week east of the Rockies, but with the current cooler than normal system over the Midwest and eastern US, nat gas demand overall will only be MODERATE.

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)