James Hyerczyk
Add to Bookmarks
Natural Gas

Natural gas futures finished sharply higher last week with the rally driven by expectations of a decline in U.S. production due to regularly scheduled pipeline maintenance. Gains were capped, however, by favorable weather forecasts and a neutral U.S. government storage report.

Last week, June natural gas futures settled at $2.931, up $0.113 or +4.01%.

Know where Natural Gas is headed? Take advantage now with 

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Bullish Traders Focused on Pipeline Maintenance

Pipeline maintenance led to a huge day/day decrease in production on Tuesday. According to Natural Gas Intelligence (NGI), a slew of pipeline maintenance events in the Northeast resulted in a 2.4 Bcf day/day drop in production. Meanwhile, Wood Mackenzie, a natural resources research and consulting firm, said unannounced operator field maintenance also likely contributed to the decline in output.


Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported on Thursday that domestic supplies of natural gas rose by 15 billion cubic feet (Bcf) for the week ended April 23.

Total stocks now stand at 1.898 trillion cubic feet (Tcf), down 302 Bcf from a year ago and 40 Bcf below the five-year average, the government said.

Natural Gas Intelligence (NGI) reported ahead of the report, a Bloomberg survey of nine analysts produced injections estimates ranging from 6 Bcf to 19 Bcf, with a median build of 8 Bcf.

Short-Term Weather Outlook

NatGasWeather is predicting that one weather system with showers and thunderstorms will stall over Texas the next few days with highs of 70s, then exiting late this weekend. A second colder system will track through the Great Lakes and Northeast Friday-Saturday with slightly cool highs of 50s and 60s. The West will be very warm with highs of 70s to 90s, apart from the cooler and showery Northwest.

A mostly comfortable pattern will rule the U.S. Sunday – Monday with highs of 60s to 80s besides hotter 90s in Texas. However, a fresh round of cooler than normal weather systems will push into the central and northern U.S. mid-week with highs of 50s & 60s, including cooler highs of 70s into Texas and the South. Overall, swings between low and moderate demand the next 7-days.

Daily Forecast

Last week’s price action likely set the early tone for what should be a bullish summer if the heat arrives as expected. Prices could pull back over the short-run into support, but we may not see a change in trend on the move as buyers will likely welcome the corrective move so that they can enter at more favorable price levels.

I think buying the dip will be the strategy moving forward since it’s a little too early in the season to chase higher prices. With the main trend up, the safest play is buying weakness, buying strength carries a lot of risk.

Near-term bullish factors will be a more consistent decline in production, stronger power burns and an early return of hotter-than-usual temperatures.

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