FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
41,040,621Confirmed
1,129,591Deaths
30,625,860Recovered
Fetching Location Data…
Advertisement
Advertisement
James Hyerczyk
Natural Gas

Natural gas futures took a hit on Friday, but still managed to post a solid gain for the week. It was a volatile week in the nat gas complex with the nearby futures contract dropping 21.3 cents on Monday and the deferred December issue posting nearly a similar gain.

The nearby futures contract was able to recover from the hit later in the week with both futures contracts benefiting from an anticipation of a recovery in liquefied natural gas (LNG) volumes and a light government storage build.

Last week, December Natural Gas futures settled at $3.277, up $0.123 or +3.90%.

US Energy Information Administration Weekly Storage Report

Last week’s EIA report covering the week-ending September 18 came in lighter than last week as expected and the price action indicates that traders thought it was bullish.

The EIA reported Thursday that domestic supplies of natural gas rose by 66 billion cubic feet (Bcf). That was smaller than the increase of 77 Bcf forecast by analysts polled by S&P Global Platts. Total stocks now stand at 3.680 trillion cubic feet (Tcf), up 504 Bcf from a year ago, and 407 Bcf above the five-year average, the government said.

There was a lot of interest in this report because traders wanted to know if the previously reported larger-than-normal print was a one-off anomaly or reflective of a looser market.

Last year, EIA recorded a 97 Bcf build for the period, and the five-year average is an injection of 80 Bcf.

Advertisement

Short-Term Weather Outlook

According to NatGasWeather for September 28 to October 1, “Showers continue across the Southeast as remnants of Beta drifts slowly eastward. Hot conditions persist over the Southwest into the Plains with highs of 90s to 100s, while cooling rains continue across the Northwest.

High pressure will rule much of the rest of the U.S. into early next week with comfortable highs of upper 60s to 80s. A major pattern change will occur mid-next week as a strong early season cool shot pushes into the Midwest and Northeast with highs of 40s to 60s, while hot over the West with highs of 80s to 100s. Overall, national demand will be low into the start of this week, then increasing to moderate to high.

Near-Term Outlook

All eyes are going to continue to remain on the short-term weather outlook and LNG demand. The weather could be volatile all week with some forecasts calling for light demand early this week, followed by strong early season cold shots across the eastern half of the U.S. at mid-week into the next week for a surge in national demand. Meanwhile, hot conditions over the West will continue.

While we expect to see a weather related surge, we also think that gains will be limited because a bearish weather pattern is expected to return across most of the U.S. October 5 – 10th. Since traders tend to look out at least two weeks, this report will be in focus.

Encouraging signs on the LNG front along with the weekly EIA storage report will also be a source of interest. According to Bespoke Weather Services, “This number (the EIA’s 66 Bcf build) reflects very tight balances – the tightest we have seen in our data all summer long.”

Ultimately, in order to sustain a rally in the deferred futures contracts, we’re going to have to see a series of average to lower builds and increasing LNG exports. Otherwise, there is risk of a storage containment problem and that would weigh on prices.

For a look at all of today’s economic events, check out our economic calendar.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US