Natural Gas Price Fundamental Daily Forecast

Natural gas futures edge higher early Wednesday after posting an impressive rebound in the previous session. The market is supported by the drop in production reported yesterday and the forecast for seasonal temperatures.

Technically speaking, the market is still in an uptrend and is holding just above a key support zone at $7.372-$6.888. The problem is that the market is overloaded on the short side, which means it’s going to take a major shift in fundamentals to clear enough shorts from the market to fuel a rally.

As of 10:47 GMT, September natural gas futures are trading at $7.899, up $0.066 or +0.84%. On Tuesday, the United States Natural Gas Fund ETF (UNG) settled at $26.97, up $0.69 or +2.63%.

Tuesday recap

September natural gas futures rose about 3% on Tuesday on a preliminary drop in daily production and raised demand forecasts for this week on higher pipeline exports to Mexico.

The continued cap on prices was expected for less hot weather over the next two weeks, which is expected to reduce air conditioning use, as well as the ongoing outage at the natural gas export plant liquefied gas (LNG) from Freeport, Texas, leaving more gas in the United States. for utilities to inject into inventory for next winter.

Refinitiv: daily production drops

Data provider Refinitiv said average gas production in the lower 48 U.S. states rose to 97.8 billion cubic feet per day in August from a record 96.7 billion cubic feet per day in July.

On a daily basis, however, production was on course to fall by a preliminary 2.4 billion cubic feet per day on Tuesday, from a record 98.3 billion cubic feet per day on Monday. That would be the biggest one-day drop since February.

Refinitiv: lower gas demand this week

With warmer weather expected, Refinitiv forecast average U.S. gas demand, including exports, to rise from 101.0 billion cubic feet per day this week to 97.3 billion cubic feet per day this week. next week.

The average amount of gas flowing to LNG export plants in the United States has fallen to 10.8 billion cubic feet per day so far in August, from 10.9 billion cubic feet per day in July. This compares to a monthly high of 12.9 bcfd in March.

Short term weather outlook

According to NatGasWeather for August 10-16, “A weather system will track the Great Lakes and East over the next few days with showers and highs of 60 to 80. The rest of the United States will be under high pressure with higher highs. 80s to 100s, including 90s on the mid-Atlantic coast.

A fresh strengthening blow will arrive over the Great Lakes and the East this weekend through next week with highs of 70-80 lower for lighter domestic demand despite warm high pressure remaining strong over the west and the central United States, including Texas with highs above 80 to 100. .

Overall demand is high today and then decreases to moderate to high. »

Short term outlook

Going into Tuesday’s session, the bearish fundamentals were all aligned to put additional pressure on prices. Forecasts had turned neutral, production was near record highs and LNG exports remained weak.

However, conditions changed a bit when a drop in production was reported. Weather is still expected to relieve demand and LNG exports are expected to remain weak until Freeport comes back online. So while lower production is going to be the driving force behind today’s strength, expect gains to be limited due to the other factors.

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