Weekly Fundamental Natural Gas Price Forecasts
Natural gas futures closed sharply higher last week, with most of the gains coming last Tuesday due to a weather-related price spike. The market then drifted mostly sideways for the rest of the week, but still managed to hold onto most of its weekly gains.
Last week, July natural gas futures were at $ 3.097, up $ 0.111 or + 3.72%.
The week started with several weather models showing the possible development of an intense heat wave, however, gains were capped and prices retreated as the heat forecast weakened and spot prices fell. At the weekend, another disappointing government storage report also weighed on prices.
Despite the series of potentially bearish events, prices have not collapsed enough to create images of a bear market in late spring and early summer. Persistent pipeline issues and a slight return to warmer temperatures have helped continue to fuel the friendly narrative suggesting higher prices in the near term.
While there are no major changes over the weekend, traders will continue to focus this week on pipeline issues and the possibility of heat returning to the forecast.
Persistent pipeline issues
NatGasWeather reported on Friday that a midday peak during the trading session may have been fueled by reports that the Texas Eastern Pipeline (Tetco) force majeure event could go unresolved for “a bit longer.”
The Weather Service also said the critical piece of natural gas infrastructure restored a 20% pressure reduction and reduced flows southwestern Pennsylvania following an amended corrective action order from the Pipeline and Hazardous Material Safety Administration (PHMSA). Although the PHMSA “temporarily approved” the pipeline company’s ability to resume operations at its “full maximum operating pressure” late last year, regulators have refused to renew the temporary approval. Tetco may need to reapply for a permit.
Energy Information Administration weekly storage report
The EIA reported on Thursday that domestic natural gas supplies increased by 98 billion cubic feet (Bcf) for the weekend of May 28. This was lower than the increase of 118 Bcf predicted by HIS Markit. In fact, the estimates were all over the place, indicating a lack of confidence in the forecasts.
Total inventories now stand at 2,313 billion cubic feet (Tcf), down 386 billion cubic feet from a year ago and 61 billion cubic feet below the five-year average, the government said.
Weekly weather forecast
According to NatGasWeather from June 7 to 13, “Very hot to warm high pressure will dominate the Midwest and Northeast early this week with highs ranging from the upper 80s to the lower 90s, while also being warm over the south. -west with the 90s and 100s for strong national demand. A hot and humid system will bring heavy showers to Texas, south and southeast with highs of 80, while a colder system will bring showers to California and the northwest with highs of 50 to 70. Overall, strong domestic demand this week.
Natural Gas Intelligence (NGI) reports that in anticipation of the next EIA report, the Schork Group said that a “particular” spike in heating demand over Memorial Day weekend in the East and Midwest s ‘is transformed into a temperate week. The typical injection for the Memorial Day holiday report is 86 Bcf, plus or minus 24 Bcf, and the five-year average is 92 Bcf. The first numbers of whispers vary between 85 Bcf and 105 Bcf. “We are currently at 95 Bcf.”