Natural Gas Price Fundamental Daily Forecast – Hotter Weather, LNG Rebound, Supply Issues Supporting Prices
Natural gas futures are trading flat shortly before the regular session opening on Tuesday after posting a fifth-straight gain. The catalysts behind the market’s strength are expectations of heat-related demand, a recovery in liquefied natural gas (LNG) levels and TETCO pipeline driven supply pressures. Cash prices were also boosted by strong cooling demand.
At 11:02 GMT, September natural gas futures are trading $3.360, up $0.006 or +0.18%.
Bespoke Weather Services Outlook
Bespoke Weather Services expects a “hotter overall base state” over the next two weeks.
“Best heat in the near term remains in the western half of the nation, where some records likely fall this week, though as we move closer to the end of the month, some modest above normal temperatures can return to the eastern U.S.,” Bespoke said.
Additionally, power burns “continue looking stronger in our weather-adjusted model, aided somewhat by a recent spike in nuclear outages,” Bespoke said. “While we would not be surprised at a pullback after such a strong move higher recently…confidence is too low, for now, to say that is more likely than not.”
NatGasWeather Outlook
According to NatGasWeather for June 14-21, “Very hot high pressure over the Southwest, Mountain West, Texas, and Plains will bring highs of 90s to 115 Fahrenheit for regionally strong demand. However, demand will be light across the Northwest, Midwest, Northeast, and Mid-Atlantic as weather systems bring showers and comfortable highs of upper-60s to 80s. Overall, high national demand this week over the West and Plains but light to moderate over the Great Lakes, Northeast, and Mid-Atlantic.
LNG Feed Gas Volumes Rebound
Bespoke also observed gains in LNG exports on Monday. After dipping below 10 Bcf last week amid maintenance work at export facilities, LNG feed gas volumes hovered above 10 Bcf on Monday. That was not far from the record 11.9 Bcf record reached in April.
Bullish TETCO Pressure Reduction
TETCO said late last Thursday a 20% pressure reduction that began this month on part of its 30-inch diameter system could last until late in the third quarter.
“We believe the market may still be underestimating the impact of the anomaly discovered on TETCO’s 30-inch pipeline,” analysts at EBW Analytics Group said Monday.
“It may take weeks or even months before the gas market fully recognizes the extent of the impact,” the EBW analysts added.
Daily Forecast
The fundamentals are combining to paint a bullish picture, but weather demand will always be a volatile variable. Bullish speculators appear to be willing to chase the market higher so it’s still vulnerable to further upside breakouts. Any price dips in the market are likely to be short-lived and bought up quickly.
Meanwhile, looking ahead to Thursday’s government storage report, early estimates are calling for a light injection. Natural Gas Intelligence (NGI) forecast a build of 74 Bcf for the week-ended June 11. Bespoke pegged the increase at 72 Bcf. Those estimates are well below the five-year average of 87 Bcf.
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This article was originally posted on FX Empire
