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Natural Gas Price Fundamental Daily Forecast – Prices Weaken as Widespread Heat Forecasts Crumble

By:
James Hyerczyk
Published: May 24, 2021, 20:28 UTC

According to the latest reports from NatGasWeather, the expected heat spurt arriving in the East is expected to be short-lived.

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Natural gas futures gapped lower on Monday, but managed to recover most of the early session loss when buyers came in as the market neared a key 50% level on the daily chart.

What a difference a week makes. It was just a week ago that rising prices were testing multi-month highs in anticipation of hotter temperatures into the Memorial Day weekend.

This week started with heat noticeably removed from the weather models, production rising, cash prices falling and increasing expectations for a triple-digit build in EIA storage figures over the near-term.

At 20:04 GMT, July natural gas futures were trading $2.961, down 0.016 or -0.54%.

Short-Term Weather Outlook

According to the latest reports from NatGasWeather, the expected heat spurt arriving in the East is expected to be short-lived. Furthermore, new weather models have trimmed demand from the 15-day outlook.

The firm said it’s still forecast to be warm over Texas and the South May 28-June 3, but most of the rest of the country is expected to be comfortable with highs of upper 60s to mid-80s.

“Of course, there’s always potential for hotter trends over the weekend,” according to the forecaster, and “based on the upper pattern, hotter trends would be more likely than cooler trends. However, the data would need to add 8 to 10-plus cooling degree days to flip sentiment to the bullish side.”

NatGasWeather said bulls now need to hold $2.90 after “failing in grand fashion” to hold $3.00. The firm expects whether $2.90 holds to be determined based on the weekend weather data being able to trend hotter for early June.

Falling Spot Gas Prices

Spot gas prices finished the week in the red amid a mostly pleasant weather pattern in the Lower 48.

NatGasWeather said national demand was set to increase last beginning late in the weekend and continue through the middle of the week, with “very warm” highs in the 80s to 90s setting up over the East. However, the heat would be more impressive if not for comfortable highs of 60s-80s most elsewhere besides.

Meanwhile, though the start of the Atlantic basin hurricane season isn’t until June 1, all eyes were on a typical system moving through the Gulf of Mexico on Friday.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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