Natural Gas Price Fundamental Daily Forecast – Heat Expected to Continue into Next Week

Natural gas futures finished higher on Friday, posting its sixth-straight higher close on increased cooling demand. The move put the market just north of the psychological $4.00 level for the first time in nearly three years.

The American and European weather models trended in opposite directions early Friday for the first week of August, with the American dataset adding to heat expectations and the European data shifting cooler, creating some uncertainty about the intensity of demand early next month, according to Natural Gas Intelligence (NGI).

However, an extension of high pressure in the week ahead is expected to produce lofty highs over much of the country, NGI wrote, providing potential for further rallying in futures and cash prices in the final week of July.

On Friday, September natural gas futures settled at $4.042, up $0.060 or 1.51%.

“We still have plenty of heat on the way…including the hottest of the summer in Texas,” Bespoke Services said.

US Energy Information Administration Weekly Storage Report

The EIA on Thursday reported an injection of 49 Bcf natural gas into storage for the week-ended July16, higher than the mid-40s Bcf print analysts reporting to major surveys had estimated.

Ahead of the report NGI reported that a Reuters’ poll of analysts produced estimates spanning builds of 30 Bcf to 60 Bcf, with a median injection of 45 Bcf. A Bloomberg poll landed at a median injection of 43 Bcf, with estimates ranging from 30 Bcf to 48 Bcf. NGI’s model predicted a 30 Bcf injection.

The EIA number was above a 38 Bcf build in the year-ago period and a five-year average injection of 36 Bcf. Total stocks now stand at 2.678 trillion cubic feet, down 532 billion cubic feet from a year ago and 176 billion cubic feet below the five-year average, the government said.

Short-Term Outlook

With multiple catalysts at work, EBW Analytics Group said Friday that the futures rally could continue. “With intense heat expected early” in the coming week, “nationally as well in Texas, and strong LNG feed gas flows and exports to Mexico, Henry Hub is likely to set new highs for the summer, supporting Nymex futures,” EBW analysts said.