Natural Gas Price Fundamental Daily Forecast – Could Flip Lower if Midday Forecasts Fail to Confirm Heat

Natural gas futures are edging higher on Wednesday after briefing piercing the July 16, 2014 main top at $9.551. This is the last major barrier before the February 24, 2014 main top at $10.354.

Traders are being cautious because the fundamentals could flip to the bearish side rather quickly. Right now, forecasts for hotter weather and higher air conditioning are providing support as well as declines in output and wind power.

At 14:04 GMT, July natural gas futures are trading $9.483, up $0.190 or +2.04%. The United States Natural Gas Fund ETF (UNG) is at $32.17, up $0.45 or +1.42%.

All Eyes on Texas This Week

Power demand in Texas broke the June record on Monday and will continue rising until it breaks the all-time high later this week as economic growth boosts overall usage and hot weather causes homes and businesses to crank up their air conditioners.

Low wind power forces generators, including those in Texas – the state with the most wind power – to burn more gas to keep the lights on and the air-conditioners blowing.

Refinitiv Output/Demand Results

Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 94.7 billion cubic feet per day (bcfd) so far in June from 95.1 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021.

On a daily basis, U.S. output was on track to drop 1.4 bcfd to a preliminary 93.8 bcfd on Tuesday, its lowest since late April. That would be the biggest one-day decline since early February.

With hotter weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise to 93.9 bcfd next week from 90.7 bcfd this week. Those forecasts were much higher than Refinitiv’s outlook on Monday.

NatGasWeather:  “Impressively Hot” Temperatures Next Week

The American and European weather models maintained ‘impressively hot” temperatures over the Lower 48 for next week in their overnight runs, according to NatGasWeather. However, models eased back on the amount of heat projected for the East during the June 18-22 time frame, resulting in a drop in cooling demand expectations, the firm said.

Early Look at Weekly EIA Numbers

Natural Gas Intelligence (NGI) is reporting that this week’s U.S. Energy Information Administration (EIA) Weekly storage report is expected to show a build of 94 Bcf, based on estimates submitted by Bloomberg. This figure would come in below the five-year average 100 Bcf injection.

Daily Forecast

Traders are a little nervous ahead of the mid-session weather updates because of uncertainty over high temperatures from June 18-22.

It is possible that the heat forecast for June 11-15 has been priced in. So in order to sustain the rally, buyers are going to expect to see the hotter temperatures continue.

At the mid-session, if the June 18-22 period continues to show lower heat intensity then prices could reverse to the downside on profit-taking.