Natural Gas Price Fundamental Daily Forecast – Robust Cooling Demand Could Drive Market to $2.00

Natural gas futures are trading higher on Tuesday after spiking higher during the previous session. The catalyst behind the move is expectations of robust cooling demand amid a summer heatwave. Some traders said the rally was also fueled by the news that Warren Buffet was buying Dominion Energy.

At 06:38 GMT, August natural gas is trading $1.849, up $0.019 or +1.04%.

NatGasWeather said, “The weekend weather data was a little cooler trending over the Great Lakes and East next weekend, which looks bearish trending in that view. However, this comes with very hot conditions over Texas, South Plains, and Southwest for this same time period with highs easily in the 100s, thereby, keeping forecast national demand strong.”

“Where patterns are now most bullish is July 16-20 as an impressively hot and large upper ridge is favored to build over most of the U.S. with widespread highs of 90s and 100s, while combining with high humidities to push Heat Indexes into the dangerous 100-115F range.”

“Overall, the nat gas markets might view the coming pattern as a little less intimidating for the 1-7 day period due to the cooler trending East, but potentially more ominous for days 10-15 due to widespread potentially record breaking heat that could garner national heatwave hype. Prices (were) higher on Monday, likely aided by hot weather patterns but also potentially due to other news including Berkshire Hathaway buying nat gas infrastructure.”

Short-Term Weather Outlook

According to NatGasWeather for July 6-12, “Upper high pressure will stretch from Texas to the Great Lakes and across the Mid-Atlantic states with very warm to hot highs of upper 80s to mid-90s. It’s also hot over much of the West with highs of 80s to 100s, hottest in the Southwest deserts. There will be cooler exceptions across the northwest and northeast corners with highs of 70s to low 80s due to weak weather systems. There will also be heavy showers over the Southeast this week as a weather system stalls, although still very warm & humid with highs of mid-80s to lower 90s. Overall, national demand will be high.”

Warren Buffett’s Berkshire Buys Dominion Energy Natural Gas Assets

The conglomerate is spending $4 billion to buy the natural gas transmission and storage assets of Dominion Energy, including the assumption of the debt, the deal totals almost $10 billion.

It’s Berkshire’s first major purchase since the coronavirus pandemic and subsequent market collapse in March. With the purchase, Berkshire Hathaway Energy will carry 18% of all interstate natural gas transmission in the United States, up from 8%.

Daily Forecast

The main trend changed to up on the daily chart on Monday. This move was likely fueled by a combination of short-covering and aggressive counter-trend buying.

The short-term range is $2.053 to $1.517. Its retracement zone is $1.785 to $1.848. Taking out this zone will indicate the buying is getting stronger, while establishing this area as support.

The main range is $2.447 to $1.517. If the upside momentum continues then look for another surge into its retracement zone at $1.982 to $2.092.

The inability to hold above $1.785 will be a sign of weakness.