Natural Gas Price Fundamental Daily Forecast – Buyers May Try to Shake Out Weak Shorts Over $2.846
Natural gas futures inched higher on Monday and are following through early Tuesday as investors react to a small change in the forecast, calling for warmer than normal weather over the next two weeks.
At 0700 GMT, September Natural Gas futures are trading $2.818, up $0.018 or +0.64%.
According to natgasweather.com, for the period August 7 to August 14, (A) “weather system with showers and cooler than normal temperatures will continue across the central and northern U.S. this week. It will be very warm to hot across the western and southern U.S. with highs of upper 80s to 100s continuing. Overall, demand will be near normal due to much of the northern U.S. being comfortable and in the mid-70s to lower 80s. Overall, national gas demand will be moderate.
In other news, according to Reuters, projected U.S. gas consumption will rise to 75.9 billion cubic feet per day (bcfd) next week from 74.3 bcfd this week as warmer weather lifted the air-conditioning demand.
U.S. gas production in the lower 48 states increased to an average of 72.3 bcfd over the past 30 days, up from 70.8 bcfd during the same period last year. But it was well short of the 73.7 bcfd seen during the same time in 2015 when output was at a record high.
Additionally, according to the U.S. Commodity Futures Trading Commission, U.S. natural gas speculators cut their net long positions to the least since November in the week to August 1 as stockpiles remain above normal for this time of year after one of the warmest winters on record and a slow but steady increase in production.
Forecast
The short-covering could continue today because of the slight change in the weather and oversold technical conditions. The price action suggests buyers may be fishing for weak short-sellers in an effort to drive prices higher so that the major bears can sell again at more favorable prices.
Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly inventories report, utilities likely added 40 billion cubic feet of gas into storage during the week-ended August 4, leaving inventories about 2 percent above normal for this time of year.
The key level to watch is $2.846. Taking out this level could trigger a spike into $2.872 to $2.899. Sellers may show up on a test of this zone.
This article was originally posted on FX Empire
