Natural Gas Fundamental Analysis – week of September 5, 2016

Natural Gas is looking for a bottom and is down 2.75% on the week as we move out of summer and into autumn season with lower temperatures and little demand for the commodity. NG is trading at 2.792 and is a buy for traders to pick up the commodity on lower prices and the hopes of a surge in temperatures and prices in early September. Futures prices around $2.80 per million British thermal units are higher than the sub-$2.00 level many predicted earlier this year, but that is seen as a temporary consequence of a hot summer that stoked air-conditioning demand. The amount of gas in U.S. underground storage in the week ended August 26 still was at an all-time seasonal high, up nearly 9% from a year earlier.

That surplus could be erased by a single frigid winter, while supply and demand suggest a balanced market ahead. Onshore natural-gas production fell in June for the fourth consecutive month, according to the U.S. Energy Information Administration. The number of rotary rigs drilling for gas in North America touched an all-time low last week of 81, according to Baker-Hughes. Eight years ago this week, it had reached an all-time high of 1,606.

Sept 1-7th: TS Hermine will make landfall over the Florida Friday with gusty winds and heavy rain. It will then track up the East Coast where it will merge with a cool front coming out of the Midwest to provide heavy showers and cooler temperatures. Although, unseasonably strong high pressure is expected to return next week east of the Rockies with above normal temperatures returning. Over the West, cooler conditions are expected as Pacific weather system move inland. Overall, nat gas demand will be MODERATE through the weekend and then HIGH next week with the southern and eastern US warming above normal.

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