Yahoo Finance Natural Gas Price Fundamental Daily Forecast – Looking for Move into $2.865 to $2.833
Natural gas futures are trading lower early Monday. The price action suggests long speculators may be finally taking profits in response to record production levels and average temperature forecasts.
At 0821 GMT, October Natural Gas futures are trading $2.909, down $0.040 or -1.36%.
U.S. Energy Information Administration Storage
According to the U.S. Energy Information Administration (EIA), U.S. natural gas in storage increased by 33 Bcf to 2.387 Tcf during the week-ended August 10. The build was slightly more than the consensus estimate for a 30 Bcf addition.
The injection fell well short of the 49 Bcf build reported during the corresponding week in 2017 and less than the five-year average addition of 56 Bcf, according to EIA data. Stocks were 687 Bcf, or 22% less than the year-ago level of 3.074 Tcf and 595 Bcf, or 20%, less than the 5-year average of 2.982 Tcf.
Production
Current data from S&P Global Platts Analytics show that dry gas production has averaged 78.2 Bcf/d thus far this year, which is 6.2 Bcf/d greater than this time last year. Platts went on to further say that it projects dry gas production to average 81.7 Bcf/d for the next two weeks.
Weather
According to NatGasWeather.com for the August 20-26 Period, “Weather systems will track across the central and eastern U.S. this week with showers and comfortable conditions where highs will reach the 70s to mid-80s for light demand. The West, South and Southeast will be hot with highs of upper 80s to 100s. Next weekend, hot high pressure will build over the eastern half of the U.S. with highs of mid-80s to 100s widespread across the central, southern, and eastern U.S. for strong demand. Overall demand will moderate this week, increasing to high next weekend.
Forecast
The early price action suggests that sellers are in control. If they can take out last week’s low at $2.898 with conviction then prices should slide into $2.865. The key area to watch is $2.838 to $2.833. We could see the return of buyers on the first test of this area. If it fails then look for a steep break into $2.799.
The early EIA storage forecast for the week-ending August 17 shows a potential build of 48 Bcf. This would be 4 Bcf less than the five-year average.
Given the new forecast, at this pace, the heating season, which begins in November, will start with a deficit. This will show up in the deferred November to March futures contracts.
This article was originally posted on FX Empire
