Natural Gas Price Fundamental Daily Forecast – Prices Supported by Slightly Stronger Demand

Natural gas futures rose for a second day on Monday as traders continued to monitor current weather models that could dramatically affect spring supply and demand levels.

July Natural Gas futures settled at $3.424, up $0.071 or +2.12%.

The latest U.S. weather models are calling for cooler temperatures over the next two weeks, which should lead to increased demand. This would mean potentially lower supply going into the summer air-conditioning season.

For the week, natgasweather.com is predicting, a cool front through the southern and eastern U.S. the next few days, dropping temperatures slightly below normal. It is also saying the northern, central and eastern U.S. is likely to be hit be a “reinforcing cool shot” late this week before warming next week. The West, including the SW and Texas, will be mostly warm to hot with highs of 80s and 90s. “Overall, natural gas demand will remain slightly stronger than normal,” according to natgasweather.com.

According to the latest report from the U.S. Energy Information Administration, total natural gas in storage stands at 2.369 trillion cubic feet. This is 13.6% lower than levels at this time a year ago but 10.8% above the five-year average for this time of year.

Forecast

Looking ahead to Thursday’s EIA report, weekly storage is expected to show a build of about 64 billion cubic feet in the week-ended May 19. Last week, the report showed a build of 68 Bcf, an increase of 71 Bcf a year ago and a five-year average rise of 90 Bcf.

The weather forecast as it stands is supportive for higher prices, but remember that traders may be looking ahead of the current forecast. If it continues to show increased demand then prices could challenge last week’s high at $3.506 later this week.

The key area on the daily chart to watch is $3.368 to $3.335. A break under $3.368 will be the first indication of a possible shift in the forecast. A sustained move under $3.335 will indicate the selling is greater than the buying at current price levels.