Natural Gas Price Fundamental Weekly Forecast – July 6-15 Forecast Will Set the Tone

Natural gas futures gained nearly 5% last week as a heatwave in Western Canada and the U.S. Pacific Northwest drove spot cash prices sharply higher. Hot weather also move into the East Coast, contributing to a 30.5 cent jump in Natural Gas Intelligence’s (NGI) Weekly Spot Gas National Average.

In addition to the rise in cash spot prices from the oppressive heat, a major production decline in the Northeast contributed to the upside momentum.

Last week, September natural gas futures settled at $3.668, up $0.168 or +4.80%.

Energy Information Administration Weekly Storage Report

According to the U.S. Energy Information Administration (EIA), natural gas in storage rose 76 billion cubic feet (bcf) during the week-ended June 25.

NGI wrote that estimates ahead of the Energy Information Administration (EIA) were close to the five-year average injection of 65 Bcf and last year’s 73 Bcf build.

The injection boosted stockpiles to 2.558 trillion cubic feet (Tcf), which is still 5.3% below the five-year average of 2.701 Tcf for this time of year.

Short-Term Weather Outlook

According to NatGasWeather for July 2-8, “Hot high pressure continues over the West and Texas with highs of 90s to 110s. However, national demand will still ease the next several days as a slow moving weather system tracks across the Great Lakes and East with heavy showers, thunderstorms, and comfortable highs of 70s to lower 80s.”

“National demand will increase next week due to hot conditions over the West and warm conditions over the South and East. Although, there were cooler trends overall due to the weather system across the Great Lakes and Northeast coming stronger/cooler. Overall, moderate-high demand the next 7-days.”

Weekly Forecast

Traders will be watching the weather over the weekend, while Monday is a U.S. holiday. This could lead to volatile trading conditions when the markets reopen on Tuesday.

Looking ahead, overall, the weather data for July 6-15^th remains hot enough to be considered bullish, although not quite as impressive in recent data after numerous Bcf in demand were shed for next week.

“Most of the lost demand (seen in the U.S. and European models) is across the northern U.S. next week as weather systems over southern Canada push further across the border,” the firm said. Overall, the pattern “remains hot enough to be considered bullish” from next Tuesday through July 15 but is “not quite as impressive in recent data after numerous Bcf in demand were shed for next week.”