Natural Gas Price Fundamental Daily Forecast – Early Trade Mixed; Midday Weather Forecasts Could Set the Tone

Natural gas futures are trading flat on Wednesday after an attempt to breakout to the upside the previous session fizzled into the close. Nonetheless, the market remains striking distance of its May 17 high at $3.204 and a longer-term top at $3.245.

Traders said that yesterday’s price spike to the upside was driven by a number of events including more supportive weather data, strong cash prices and a large dip in production.

At 12:18 GMT, July natural gas is trading $3.125, down $0.003 or -0.10%. This is a notable drop from yesterday’s intraday high at $3.198.

Today’s mixed results may be the result of a change in the weather forecasts, weaker cash prices or a recovery in production. The news is scarce early in the session. Volatility and volume are also below average, but conditions could change with the release of the afternoon weather forecasts.

Short-Term Weather Forecast

According to NatGasWeather for June 8 -14, “The central and southern U.S. will be hot with highs of 90s and 100s as high pressure rules. A slow moving weather system over the Great Lakes, Ohio Valley, and Northeast will continue to bring showers, thunderstorms, and warm highs 80s. California and the Northwest will be mild as Pacific weather systems bring showers and highs of 60s and 70s. Hot high pressure will become anchored over the West early next week as weather systems with showers sweep across the Great Lakes and East and cools highs of 60s to lower 80s. Overall, high national demand this week.”

Early Look at Energy Information Administration Storage Report

NGI’s model is calling for a 100 Bcf injection for the week-ended June 4. That would compare with a 95 Bcf build recorded a year earlier and a 92 Bcf five-year average injection.

NGI is also reporting that Energy Aspects issued a preliminary estimate for a 111 Bcf injection for the upcoming EIA report.

EIA Raises 2021 Henry Hub Natural Gas Price

The Energy Information Administration (EIA) has raised its expected average 2021 Henry Hub natural gas spot price to $3.07/MMBtu, which would come in more than $1 above the $2.03 average recorded in 2020, Natural Gas Intelligence (NGI) reported.

Daily Outlook

The fundamentals at this time are supportive, but the price action seems to be indicating that a key piece of the bullish puzzle is missing, and that’s likely to be the 10 – 15 day weather forecast. If the midday weather reports show heat during that time period then look for a late session rally.

Bespoke Weather Services said on Tuesday that the warmer trend in the most recent weather data essentially erased the cooler changes seen over the weekend. It also put June in the running for the Top Five hottest Junes on record, in terms of the national gas-weighted degree day count.