Natural Gas Price Fundamental Daily Forecast – Could Fly Through $4.00 if Midday Reports Confirm Hotter Trends

Natural gas futures are trading higher on Wednesday with the lead month futures contract nesting just under the psychological $4.00 level. Given the current upside momentum, it looks as if speculative buyers are going to take a run at this level and maybe even more. The catalysts behind the rally are a combination of bullish weather forecasts and tight supply.

At 14:52 GMT, September natural gas futures are trading $3.899, up $0.047 or +1.22%.

Natural Gas Intelligence reported that analysts at EBW Analytics Group attributed the recent “surge” in natural gas prices primarily to higher demand expectations for the second and third upcoming storage weeks and to “soaring” prices in the physical market.

“Henry Hub gained 8.5 cents yesterday, averaging $3.83, even though day-ahead demand was much lower than next week’s expected peak demand,” the EBW analysts said.

Bespoke Weather Services Sees Hotter Trend

The latest forecast data as of early Wednesday continued to trend hotter, according to Bespoke Weather Services. The firm added gas-weighted degree days to its updated 15-day projections.

“All of the changes lie in the forecast for next week, as we continue to see models shift hotter in locations from the lower Midwest into the South, especially Texas,” Bespoke said.

Natural gas is on a seemingly “unstoppable” rally, and touching $4.00 looks like a given,” according to Bespoke.

Early Peek at This Week’s EIA Report

Looking ahead to Thursday’s Energy Information Administration storage report, NGI’s model is predicting a 30 Bcf injection for the week ended July 16. Bespoke estimated a storage increase of 42 Bcf

Daily Forecast

As we approach the $4.00 level, buyers could get a little cautious, especially ahead of Thursday’s EIA report. Prices could pull back in the event of a disappointing print, or if the mid-session forecasts show declining cooling degree days during the July 30-August 5 time frame.

Nonetheless, EBW analysts feel …”the upside price risk remains high. Demand is likely to peak just as August reaches final settlement. With opportunities for cool displacement largely exhausted, there is no clear stopping point for how high prices might need to rise to adequately refill storage before the injection season ends.”

Additionally, “All the changes lie in the forecast for next week, as we continue to see models shift hotter in locations from the lower Midwest into the South, especially Texas,” Bespoke said.