Natural Gas Price Fundamental Daily Forecast – Weak on Mixed Outlook in Overnight Weather Forecasts

Natural gas futures are trading lower on Tuesday after giving back earlier gains as buying faded in response to a mixed outlook in the overnight weather forecasts and a drop in demand for liquefied natural gas (LNG).

At 14:17 GMT, September natural gas futures are trading $3.670, down $0.062 or -1.66%.

According to analysts at EBW Analytics Group, natural gas prices may have limited upside in the near-term, Natural Gas Intelligence (NGI) reported.

EBW analysts noted a drop in cooling degree days from the updated 15-day forecast and recent declines in LNG export volumes.

“LNG feed gas demand continues to be weak due to maintenance at Cameron and Sabine Pass,” the EBW analysts said. “Wind output in Texas is significantly higher this week, and the January 2022 contract is nearing $4.00, where resistance is likely to be strong. It would not be surprising, therefore, if the rally started to lose steam, with the August contract’s triple top at $3.79-3.82 continuing to hold.”

Short-Term Weather Outlook

According to NatGasWeather for July 12-18, “National demand will increase this week as upper high pressure builds back across the East with highs of upper-80s to 90s, while still hot to very hot over the West into Texas and the Plains with highs of 90s to 110s. A weather system with areas of showers will stall over the Southern Great Lakes and east-central U.S. with highs of 70s to lower 80s for locally lighter demand. National demand will ease late next weekend as weather systems over the Great Lakes and East cool highs into the 70s and 80s, although still hot over the West, Texas, and Great Plains. Overall, national demand will be high this week.”

Early Look at Thursday’s EIA Storage Report

According to NGI’s model, Thursday’s Energy Information Administration (EIA) weekly storage report is expected to show a 39 Bcf injection for the week-ended July 9. That would compare with a 47 Bcf build in the year-ago period and a five-year average injection of 54 Bcf.

Daily Forecast

Overnight trends in the weather data were mixed, according to NatGasWeather. The major models added to demand expectations for some days but lowered projected demand for others, resulting in only slight changes overall, the firm said.

Technically, the main trend is up, but momentum has been drifting lower since July 6. A trade through $3.789 will signal a resumption of the uptrend. A move through $3.154 will change the main trend to down.

The minor range is $3.789 to $3.495. Its 50% level or pivot at $3.642 is controlling the direction of the market on Tuesday. Look for an upside bias on a sustained move over this level. A sustained move under $3.642 will signal the presence of sellers. If this move creates enough downside momentum, we could see a test of $3.495 – $3.472 over the near-term.