Natural Gas Price Fundamental Daily Forecast – Less Cooling Demand Expected Through Early August

Natural gas futures plunged to a two-week low on Monday, continuing the downside momentum which began late last week. The selling pressure was related to forecasts for less cooling demand through early August than previously forecast. Prices also fell for the fourth straight session, the market’s longest losing streak since early July.

September Natural Gas futures settled at $2.822, down $0.079 or -2.67%.

Meteorologists forecast temperatures in August would be near average after a warmer-than-normal June and July.

According to natgasweather.com, for the period July 24 – July 30, “A weather system with powerful thunderstorms and cooling will sweep across the Ohio Valley and Northeast through Monday to ease national demand.”

“It remains hot over the western, central, and southern U.S. with highs of 90s and 100s as high pressure dominates, which will expand and gain ground over the Great Lakes and East during the middle of the week to bring a return to strong demand.”

“However, another cool shot will follow Friday through Sunday over the East for a swing back to seasonal national demand. Overall, natural gas demand will be high except for the northeastern U.S.”

Forecast

The direction of the natural gas market is currently being dictated by the bearish weather report. Unless the forecast changes, look for the downside pressure to continue. This means that gains will be limited and any rallies are likely to be met with renewed selling pressure.

Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly inventories report, utilities likely added 34 billion cubic feet of gas into storage during the week-ending July 21. This would leave inventories about 4 percent above normal for this time of year.

The key level to watch on the upside is $2.934. Overcoming this level won’t turn the market bullish, but it could drive the market into the next resistance level at $2.966. We could see a strong short-covering rally if the market overcomes $2.966.

The inability to overtake $2.934 will indicate the market is in the strong hands of sellers. This could create enough downside momentum to challenge the July 5 bottom at $2.830.