Natural Gas Price Fundamental Daily Forecast – Historically Low Storage Levels, Hot Temps Driving Price Action

Natural gas futures are expected to open the U.S. session higher based on the pre-market trade. The catalysts behind the move are bullish medium-range weather forecasts that could develop into a long-range issues.

At 1024 GMT, July Natural Gas is trading $2.979, up $0.030 or +1.02%.

The forecasts are impacting prices because of the historically low storage inventories. Spot gas markets are also moving higher, dragging futures with them amid the persistent above-average temperatures.

On Sunday, the weather forecasts turned decidedly hotter for the coming weekend and into next week. The data also showed a possible stronger and hotter ridge gaining ground across the country June 23-26, although exactly which regions will be impacted greatest is uncertain, NatGasWeather.com said.

Bespoke Weather Services, however, expressed concern that global ensemble forecasting system guidance “may be overdoing long-range heat risks” given various weather patterns in play. Still, the sustained warmth (if forecasts hold) should support a natural gas market that otherwise remains fairly loose, Bespoke said.

In other news, looking ahead to Thursday’s U.S. Energy Information Administration’s weekly storage report, analysts forecast an increase in a range between 83 and 93 billion cubic feet (bcf) for the week-ended June 8.

That compares with a build of 92 bcf in the preceding week, an increase of 78 bcf a year earlier and a five-year average rise of 91 bcf.

Total natural gas in storage currently stands at 1.817 trillion cubic feet (tcf), according to the U.S. Energy Information Administration.

According to the EIA, that figure is 79 bcf, or around 30.5% lower than levels at this time a year ago, and 512 bcf, or roughly 22% below the five-year average for this time of year.

With the return of hot weather, July Natural Gas has a better chance of breaking through the psychological $3.000 level. This could trigger a spike to the upside, but hedgers are likely to start selling as the market nears $3.040 to $3.050.