Natural Gas Price Fundamental Daily Forecast – Lower Production, Upcoming Heat Fueling Bullish Outlook

Natural gas futures are soaring shortly after the opening on Monday, boosted by reports of declining production and new forecasts calling for increasing heat toward the middle of the month.

At 13:33 GMT, July natural gas futures are trading $9.178, up $0.655 or +7.69%. The United States Natural Gas Fund ETF (UNG) is at $31.11, up $2.15 or +7.42%.

Refinitiv Output and Demand Projections

Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 94.5 billion cubic feet per day (bcfd) so far in June from 95.1 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021.

Refinitiv projected average U.S. gas demand, including exports, would rise from 85.3 bcfd last week to 86.4 bcfd this week and 89.bcfd in next weeks.

Weekly Weather Forecast

According to NatGasWeather for June 6-12, “Weather systems with showers and thunderstorms will track across the northern half of the U.S. this week with comfortable highs of upper 60s to lower 80s.

The southern half of the U.S. will be very warm to hot with highs of upper 80s to 100s as upper high pressure rules, hottest from California to West Texas.

Overall, light demand across the northern U.S. and moderate to strong demand across the southern U.S.

Short-Term Forecast

Technically speaking, the main trend is down, but momentum is trending higher. Currently, the market is hovering just below the short-term main top at $9.447 and the long-term main top at $9.551. Both are potential upside targets. On the downside, the support is a minor 50% level at $8.783.

While lower production is providing the support, the bullish change in the weather forecasts are driving prices higher.

EBW analyst Eli Rubin told clients, “Building heat in mid-June – especially in Texas – may be awakening fears of another blistering hot summer.”

NatGasWeather wrote, “The weekend weather data continued to favor the hot upper ridge over the southern U.S. this week expanding northward June 15-20, with highs of 90s gaining territory over the Plains and Midwest in a relatively bullish set up.”

The weather service also added, this week’s trading is poised to bring more “exceptionally volatile” conditions.

If production remains low and the forecasts hold up, we could see another bullish spike in prices.