Natural Gas Price Fundamental Daily Forecast – Short-Term Fundamentals Supportive but Buyers Tentative

Natural gas futures are trading lower after giving back all of its early gains on Tuesday as buyers remain tentative due to volatile fundamentals. The key fundamentals driving the market higher the last few sessions have been weaker day-to-day production and sweltering heat that could stick around the next two weeks.

At 14:40 GMT, September natural gas futures are trading $6.255, down $0.064 or -1.01%. The United States Natural Gas Fund ETF (UNG) is at $21.75, down $0.28 or -1.27%.

Production Declining

Natural Gas Intelligence (NGI) is reporting that Wood Mackenzie told clients that lower 48 production estimates as of early Tuesday were showing a roughly 2.8 Bcf/d decline day/day, down to around 93 Bcf/d on lower supply flowing out of the Northwest and the New Mexico portion of the Permian Basin.

In the Northeast, declines totaling roughly 1.3 Bcf/d were spread across Ohio, northeastern Pennsylvania and southwestern Pennsylvania, Wood Mackenzie analyst Laura Munder said. Permian New Mexico output, meanwhile, was off around 1.8 Bcf/d.

Short-Term Weather Forecast

According to NatGasWeather for July 12-18, “Much of the US will be hot to very hot today and Wednesday with highs of upper 80s to 110s, hottest California to Texas where highs will be 100-112 F.

A weak tropical system will remain stalled along U.S. Gulf Coast the next several days with heavy showers and local cooling.

A weather system with showers and comfortable highs of 70s and 80s will track across the Great Lakes the next few days, then across the Ohio Valley and Northeast late this week to ease national demand.

Hot high pressure will expand to rule most of the U.S. next week for strong to very-strong demand.

Short-Term Outlook

The main trend is down. A trade through $6.812 will change the main trend to up. A move through the swing bottom at $5.324 will signal a resumption of the downtrend.

The market is also straddling a retracement zone at $6.557 to $5.839. Look for an upside bias to develop on a sustained move over $6.557. The downside bias could pick up steam on a sustained move under $5.839.

Hotter temperatures in July and August are expected to offset demand destruction from Freeport. This could encourage traders to buy weakness or a dip. So don’t be too discouraged by today’s weakness because it could be setting up the next buying opportunity.