Natural Gas Price Fundamental Weekly Forecast – Cooling Trend Expected to Start Middle of Week Through August 30

The week will start with mixed weather conditions. NatGasWeather points out blistering conditions in Texas and out West, but cooler-trending weather outlooks for the rest of the country.
James Hyerczyk
Natural Gas

Natural gas futures finished higher last week as traders continued to build-on the week-long support base. However, the inability to close near the high for the week after a huge government storage miss sent prices soaring on Thursday, suggests traders are starting to react to the forecast for cooler temperatures for the end of August.

Last week, October natural gas settled at $2.207, up 0.074 or +3.47%.

U.S. Energy Information Administration Weekly Storage Report

On August 15, the EIA reported that domestic supplies of natural gas rose by 49 billion cubic feet for the week ended August 9. Traders were looking for an average increase of 59 billion cubic feet. That compares with last year’s 35 Bcf injection and the 49 Bcf five-year average, according to the EIA.

Total stocks now stand at 2.738 trillion cubic feet, up 357 billion cubic feet (Bcf) from a year ago, but 111 Bcf below the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for August 16 to August 22, “Strong high pressure will dominate the southern US with highs of 90s to 100s, hottest from California to Texas for strong demand. Comfortable conditions continue across the Midwest and Northeast through the weekend with highs of 70s and 80s for light demand. However, hotter temperatures will spread across the East Coast and northward late this weekend through mid-next week with highs of upper 80s to lower 90s. Overall, national demand will be increasing to high through mid-next week, then easing.”

Weekly Forecast

The week will start with mixed weather conditions. NatGasWeather points out blistering conditions in Texas and out West, but cooler-trending weather outlooks for the rest of the country. On Friday, they said both the American and European models were cooler overnight, with the latter model making the biggest shift as it lost more than 10 cooling degree days (CDD).

NatGasWeather also sees the hot pattern for much of the United States through the middle of the week, with a cooling trend late in the week through August 30.

“Essentially, weather sentiment remains bullish on the front but bearish biased by late in the week,” NatGasWeather said.

The question for traders this week is whether the call of cooler temperatures has already been priced into the market.

Some traders are already looking ahead to September.

Natural Gas Intelligence reported, “Considerable attention is going to turn to the Labor Day storage week and whether triple-digit injections could be observed in September, or if such builds have to wait until October,” according to Mobius. “A delay to October would neutralize some of the recent market headwinds.”

Mobius went on to say, “However, if attention turns to September and consensus begins to see potential for a sub-325 Bcf cumulative injection, the market will have to weigh the risk of a colder-than-normal October. Last October was near normal, and it has been 10 years since there was a meaningful cold deviation versus normal, so this risk could be dismissed until late September.”

“However, it is certainly worth noting because normal weather was enough to get the market moving directional higher last year.”

On the weekly charts, the upside target is the retracement zone at $2.278 to $2.332. We could see a pop if buyers can take out $2.332. There is plenty of room to $2.510.

On the downside, the key target is $2.159 to $2.132. Prices could linger in this zone. A sustained move under $2.132 will indicate the selling pressure is getting stronger.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
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.
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.