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James Hyerczyk
Natural Gas

Natural gas futures are trading nearly flat on Tuesday due to weak fundamentals. Spot prices are rising as cooler temperatures move out of the Midwest and East to make way for warmer weather, but this is having little impact on futures prices. Even increasing chances of late August heat have failed to drive up futures prices.

At 11:49 GMT, September natural gas futures are trading $2.091, down $0.014 or -0.67%.

The major weather services forecast heat, but just not enough to offset near-record production, lower liquefied natural gas (LNG) intake and growing storage inventories.

Bespoke Weather Services no projects this August will finish hotter than last August based on national GWDDs (Gas-Weighted Degree Days), and is in the top 8 hottest now for any August in its database, dating back to 1981. It also sees above-normal heat into September as well.

However, NatGasWeather said the weather data still doesn’t look as hot as needed August 24 to August 28. The weather experts don’t view the pattern as hot enough before and after August 19-24, “which could lead to lower prices in time without further hotter trends.”

Short-Term Weather Outlook

According to NatGasWeather for August 13 to August 19, “Strong high pressure will dominate the southern US with highs of 90s to 100s, hottest over the Southwest & Texas. Weather systems will push across the Midwest and Northeast through the weekend with highs of only 70s and 80s. Overall, strong demand over the southern US but only light to moderate demand across the northern US Tuesday thru Thursday of next week. Overall, demand will be moderate to low across the northern US and high across the southern US, but not quite strong enough overall.”


Daily Forecast

Spot gas rises may rise due to short-term heat, but it’s not likely to drive futures prices higher. Futures traders are focusing on the end of the month forecasts. Although they indicate heat that could extend into early September, it may not be enough to spur a spike in demand.

The trend is down. A trade through $2.029 will signal a resumption of the downtrend.

The main range is $2.333 to $2.029. Its 50% to 61.8% range at $2.181 to $2.217 is a potential upside target. Since the main trend is down, sellers are likely to show up on a test of this zone.

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