Natural Gas Fundamental Analysis – November 6, 2015 – Forecast

Analysis and Recommendations:

Natural Gas  continued to drop giving up 5 points ahead of the weekly inventory due later in the day and is trading at 2.257 looking for a new bottom.  Natural-gas supplies in storage is “really full” and the market still has a couple of more reporting weeks that will show the usual build up in supplies ahead of the winter drawdown season, according to Beth Sewell, managing partner at Quantum Power & Gas Services.

“I call it economics 101: that’s where supply is greater than demand and yes, it happens this time every year,” she said.

Natural gas tends to see a demand slowdown, in between increased consumption for summer cooling and winter heating.

Natural gas prices could rise in the short term and see resistance at $3 per MMBtu. Prices tested this mark in April 2015. By contrast, oversupply concerns could drag natural gas prices lower. Natural gas prices could see support at $2 per MMBtu. Prices hit this mark in October 2015.

The EIA forecasts that US natural gas prices could average around $2.8 per MMBtu in 2015 and $3.1 per MMBtu in 2016. Goldman Sachs (GS) forecasts that natural gas prices could average around $2.7 per MMBtu in 4Q15. Bank of America Merrill Lynch (BAML) projects that gas prices could average around $2.85 per MMBtu in 2015. The gas price chart above suggests that natural gas prices could fluctuate between $2 and $2.60 per MMBtu in the short term.

Natural Gas Weekly Weather Outlook

October 29th – November 4th: A mild and moist weather system tracking across the Mid-Atlantic and NE will exit today. However, a colder system out of southern Canada will sweep through the northern Plains and Midwest today, and across the NE Friday while weakening. This will bring another round of showers, with a rain/snow mix into the coldest air over the Great Lakes. Overnight lows behind the cold front will drop into the upper teens to 30s with highs of only 40s and 50s. There will also be weather systems tracking across the West the next few days with showers and cooling, with a track then through the mid-central US this weekend. This will be followed by a colder and stronger Western US system next week, while the central and eastern US becomes warmer than normal. Overall, demand will be MODERATE, then dropping back LOW by early next 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)