Natural Gas Price Fundamental Daily Forecast – Pressured by Easing End-of-Month Temperatures

Natural gas futures are inching lower on Tuesday, hovering just above a major support zone that could draw the attention of new buyers after a steep two-week decline.

Helping to provide some support is strong demand, but not enough to offset the devastation from the LNG mishap at the Freeport terminal on June 8. Furthermore, the market is still adjusting to the news that the facility will be shut down until at least September, and may not be fully operational until the end of the year.

At 11:55 GMT, August natural gas futures are trading $6.622, down $0.284 or -4.11%. On Friday, the United States Natural Gas Fund ETF (UNG) settled at $23.66, down $1.61 or -6.37%.

Latest Supply/Demand News from Refinitiv

Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 94.8 bcfd so far in June from 95.2 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021.

With hotter weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise from 92.5 bcfd this week to 93.5 bcfd next week and 98.4 bcfd in two weeks.

The amount of gas flowing to U.S. LNG export plants fell from an average of 12.5 bcfd in May to 11.6 bcfd so far in June due to the Freeport outage, according to Refinitiv.

Short-Term Weather Forecast

According to NatGasWeather for June 22-28, “National demand will be high to very high the next 5-days as hot high pressure strengthens over much of the US with widespread highs of 90s to 100s, hottest from Texas to the Mid-Atlantic Coast.

Comfortable conditions are expected over the Northwest to the Upper Great Lakes with highs of 60-80s.

National demand will ease June 27-28 as weather systems with showers cool the Midwest and Northeast into the upper 60s to 80s, although very warm to hot over the western, central, and southern US as high pressure rules with highs of mid-80s to 100s.”

Daily Forecast

Traders are always looking at a two-week horizon so it’s no surprise that cooler trends for July 26 – July 3 across the Midwest and Northeast are keeping a lid on prices at this time.

Washing out the current weather demand is the Fredport outage, and we won’t know how much it influenced the storage figures until Thursday’s Energy Information Administration (EIA) weekly storage report for the week-ending July 17.

Technically speaking, the key area to watch is the long-term retracement zone at $6.587 to $5.865. This is a value zone so new buyers could return on a test of this area. However, the market is going to need some help from the weather to trigger the start of a strong counter-trend rally.