Natural Gas Price Fundamental Weekly Forecast – Favorable Weather Capping Gains, but Bulls Eyeing Summer HeatContinued strong LNG and pipeline exports along with the onset of summer cooling demand looming are likely to underpin prices this week.
Natural gas futures finished higher last week helped by a friendly weekly government storage report, strong European demand for U.S. liquefied natural gas (LNG) and elevated demand from Asia. Weather conditions continue to remain favorable for this time of year, but some traders are already starting to price in greater demand due to expectations of a hot summer.
Last week, June natural gas futures settled at $2.958, up $0.027 or +0.92%.
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Weekly Weather Forecast
According to NatGasWeather for May 10 – 16, “Weather systems and associated cool shots with showers and thunderstorms will continue across the Plains, Midwest and Northeast this week with highs of 40s to 60s and lows of 30s and 40s. Cooling will also push into Texas, the South/Southeast after Monday with highs of 70s to low 80s for light demand. The Northwest will be nice with highs of 60s and 70s, while very warm to hot California and the Southwest with 80s and 90s. The central and northern U.S. will warm next weekend into the 70s to lower 80s for lighter demand. Overall, moderate demand through Thursday – Friday, then low.”
Energy Information Administration Weekly Storage Report
The EIA reported last Thursday that domestic supplies of natural gas rose by 60 billion cubic feet (Bcf) for the week ended April 30.
Ahead of the report, Natural Gas Intelligence (NGI) reported that a Bloomberg survey showed a median estimate for a 66 Bcf injection. Estimates generated by a Reuters poll showed a median of 65 Bcf. The Wall Street Journal’s weekly survey showed an average of 62 Bcf.
Total stocks now stand at 1.958 trillion cubic feet (Tcf), down 345 Bcf from a year ago and 61 Bcf below the five-year average, the government said.
Continued strong LNG and pipeline exports along with the onset of summer cooling demand looming are likely to underpin prices this week and could even launch another surge to the upside.
EBW Analytics Group CEO Andy Weissman said solid exports and other fundamentals support higher prices by summer. Seasonal “peaks in power demand, record LNG and Mexico exports, and a robust domestic economy – all set against flat production – create growing fundamental imbalances,” Weissman said.