Natural Gas Price Fundamental Daily Forecast – Turning Bullish on Expectations of Increased US LNG Exports

Natural gas futures are trading flat early Wednesday after posting a dramatic reversal to the upside the previous session. The move was strong enough to drive the October futures contract through its May 2020 high and into levels not seen in over a year.

Natural Gas Intelligence (NGI) said, prices soared as “traders attempted to close the massive gap between the front of the curve and the winter contracts. Despite little change in the fundamental backdrop.”

Meanwhile, spot gas prices were mixed as California heat was seen fading in the coming days. NGI’s Spot Gas National Average plunged 23.0 cents to $2.300.

At 06:45 GMT, October natural gas futures are trading $2.560, up $0.004 or +0.16%.

Short-Term Weather Outlook

According to NatGasWeather, “Hot conditions continue across the western and southern U.S. with highs of 90s and 100s, hottest in California and the Southwest. Weather systems with showers and comfortable highs of 70s to 80s will bring light demand to the Midwest, Mid-Atlantic, and Northeast.

Warmer temperatures will gain coverage over the eastern half of the U.S. this weekend into early next week with highs of lower 90s returning across the East Coast.

Overall, strong demand in the western half of the U.S. and moderate for the eastern half. “

Daily Forecast

The price action so far in August is very encouraging for bullish traders. For months, the nearby markets have been rangebound, but today’s breakout over the May top may be signaling that there are strong buyers out there.

This summer, the markets have performed remarkably well despite unusually high storage levels, demand destruction from COVID-19 and the steep plunge in crude oil prices. The recent price action suggests that the worst may be behind us.

The major bullish factor appears to be shrinking European surpluses. This is the real surprise because I don’t think a lot of the short-sellers saw it coming. The European economy appears to be recovering from coronavirus faster than the U.S. economy. Furthermore, they have money to spend now that the European Union has promised stimulus.

We’re starting to see reduced cancellations in European LNG exports, which is a positive sign for prices. This is increasing expectations that LNG exports from the U.S. will increase in the months ahead.

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