Natural Gas Price Fundamental Daily Forecast – Supported by Cooler Weekend Weather

Natural gas futures are trading higher on Monday shortly after the regular session opening. The market is trading inside Friday’s range and remains inside its five-day range, which suggests investor indecision. Traders continue to battle over supply and demand, causing a choppy two-sided trade.

The front of the market’s curve is being pressured by the demand destruction being imposed by the outbreak of the coronavirus, while the back of the curve is being propped up by an expected pullback in production.

At 12:41 GMT, June natural gas futures are trading $1.969, up $0.079 or +4.18%.

Short-Term Weather Outlook

According to NatGasWeather for May 4 to May 10, “Weather systems with showers and cooling will sweep across the northern U.S. with highs of 40s to 60s. The Southwest into Texas will be hot Monday with highs of 90s, while warm over the South and Southeast with 80s. Cooler air will push into Texas, the South, and Southeast as the week progresses, dropping highs to be the perfect 70s and 80s. The Southwest will be hot with 90-100s, while mild to warm over the rest of the West with 60s to 80s. Overall, moderate heating demand northern U.S., but lighter cooling demand Texas/South after Monday.”

US Energy Information Administration Weekly Storage Report

The U.S. EIA reported last Thursday that domestic supplies of natural gas rose by 70 billion cubic feet (Bcf) for the week-ended April 24. That was in line with average expectations.

Total stocks now stand at 2.210 trillion cubic feet, up 783 billion cubic feet from a year ago, and 360 billion feet above the five-year average, the government said.

Natural Gas Rig Count Drops

The U.S. natural gas rig count dropped four units to fall to 81 during the week-ended Friday May 1, while aggressive retrenchment remained the dominant theme in the oil patch, according to data from Baker Hughes Co.

Daily Forecast

According to NatGasWeather, “The Baker-Hughes rigs report Friday afternoon showed another large week over week decline of 53 oil rigs and a loss of 4 gas rigs. This suggests further decreases in nat gas and associated nat gas production to come. But there’s also been huge losses in demand due to COVID-19, especially in the industrial and commercial sectors.”

This should help the deferred contracts gain on the nearby futures contract.

However, one isn’t expected to go down and the other up. The nearby contract could find support today due a short-term shift in the weather pattern.

“The weather data trended cooler for mid-May late last week and the weekend data trended cooler with it as both the GFS and European models gained 10 Heating Degree Days (HDDs).” This is likely helping to support the June natural gas futures contract early Monday.