Natural Gas Fundamental Analysis – November 19, 2015 – Forecast
Natural Gas gained 27 points to trade at 2.397 climbing off of seasonal lows as traders prepare for this week’s inventory. NG gained after meteorologists predicted colder-than-normal temperatures in much of the U.S. in the week ahead. On Friday, natural gas prices surged 10.1 cents, or 4.47%, as a smaller-than-expected storage injection and colder forecasts boosted prices.
This time last year the Henry Hub Natural Gas 1 Month futures contracts were soaring above the $4/MMBtu mark, as a delayed winter prepared Americans to increase their heating needs, leading to believe that higher prices were in order. A number of U.S. liquefied natural gas (LNG) export projects were also in the pipeline throughout the year following U.S. plans to become a global exporter of the commodity.
The U.S. Energy Information Administration said Friday natural gas supplies in storage rose by 49 billion cubic feet last week, below expectations for an increase of 51 billion. That compared with builds of 52 billion cubic feet in the prior week, 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet. Total U.S. natural gas storage stood at an all-time high of 3.978 trillion cubic feet, almost 10% higher than levels at this time a year ago and 4.5% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
November 13-19th: A strong weather system will track across the Midwest and eastern US today with showers along the cold front and rain and snow behind it. Morning lows will be quite chilly into the core of the colder air with 20s and 30s, including teens over the Rockies. This system will bring stronger demand to the East this weekend after being lighter than normal this week. High pressure and milder temperatures over the western US will give way to another Pacific weather system this weekend into early next week with another round of rain and snow. This will again force the mild ridge back over the eastern US for much of next week with temperatures warming back above normal. Overall nat gas demand will be MODERATE.
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