Natural Gas Monthly Forecast – June 2017

The prices of natural gas are likely to be determined as a function of supply and demand and this is true in the case of any instrument and also in the case of commodities which are actually physical things that you buy and use. In the case of natural gas, the demand is highly dependent on nature and the weather and that is what separates the natural gas from the other commodities. Its prices are highly seasonal and this is reflected in the way that the prices move this way and that depending on the weather and the forecast of the future weather, almost on a daily basis.

Natural Gas Prices Fall

The traders and the investors always try to forecast the demand and the supply and tend to adjust the prices and that is the reason why, most of the time, we find that the prices in almost all instruments are not a reflection of their true price at this point of time but a forecast of what it is likely to be in the future. This is the same with the natural gas prices as well and that is one of the reasons why we have been seeing the prices on a downfall for most of the month though the buyers still try to keep buying the instrument on dips.

Though the weather right now is ok overall, according to the season, it is forecasted that the weather is likely to remain cooler for much longer than what was originally anticipated. This basically means that the demand for natural gas for cooling would be lesser than what was expected and this drop in the demand is likely to keep the prices of natural gas under pressure.

The production and the storage draw continue to be at high levels which means that the supply is beginning to overwhelm the demand and that is why we have seen the prices falling off, especially towards the end of the month as the cooler climates continue to rule. This is why we have seen the natural gas prices fall off from its highs in the $3.5 region towards the $3 support region where it traded to close the month. This is expected to be a very important region in terms of support and also in terms of psychology as well and that is why we can expect some bounce from this region.

Natural Gas Prices Likely to Be Supported

Looking ahead to the month of June, we can expect the weakness to continue during the early part of the month and we can expect some choppy trading as a result. It is clear that there is buying going on after every dip in the prices as the buyers do understand that the gas prices are likely to move higher in due course of time as the weather changes in the coming months. So they believe that this would be the price range, especially as it is very close to the support region, where they should be buying the gas contracts which they can make use of when the price rises. With this in mind, we believe that the gas prices are likely to be supported and this could the translate into a bounce in the second half of the month and we should also see the weather change over the short term which would also help to support the gas prices.

Towards the end of the month of June, we should expect the buying to increase in natural gas contracts from the retail traders and large investors alike, as they see the weather change, and we should probably close the June month higher from where we are now.