Natural Gas Price Fundamental Daily Forecast – Market Jumps to 14-Year High on Strong Global Demand

Natural gas futures are up sharply on Tuesday as a worldwide heatwave continues to drive demand for fuel, and as Europe’s determination to become independent of Russian fuels agitates global energy markets. The market soared nearly 10% at its highest level on Tuesday to $9.419, its highest level since July 2008.

At 14:31 GMT, September natural gas futures are trading $8.889, up $0.318 or +3.71%. The United States Natural Gas Fund ETF (UNG) is at $30.35, up $0.64 or +2.15%.

U.S. gas futures lag far behind global prices because the United States is the world’s top producer, with all the fuel it needs for domestic use, while capacity constraints limit LNG exports. Meanwhile, gas is trading around $55per mmBtu in Europe and at $39 in Asia. That put European prices up about 10% on the expectation of further cuts in gas flows from Russia via the Nord Stream 1 pipeline.

Short/Intermediate-Term Weather Forecast

According to NatGasWeather for July 26-August 1, “Weather systems with showers will track across the Midwest and Ohio Valley this week with highs of 70s and 80s for lighter demand.

The rest of the U.S. will be under strong upper high pressure with highs of 90s-100s, hottest in the Southwest, Texas, and the Southern Plains, but also hot across the Northwest.

The 8-15-day period is still forecast to be impressively hot as strong high pressure rules most of the U.S. with highs of 90s and 100s besides near the Canadian border for very strong demand. Although, it’s possible the weather data has gotten too hot for the 8-15-day period.

Longer range weather maps for early August continue to favor hotter than normal temperatures over most of the U.S. for what would keep weather sentiment solidly bullish if it were to hold, which is our expectation, the firm said.”

Gazprom to Reduce Gas Flows; EU Counters with Reduced Gas Consumption

Prices are jumping in Europe and other places including the United States after Gazprom said it would further reduce flows through the vital Nord Stream 1 pipeline.

Beginning Wednesday, the pipeline will operate at just 20% of its capacity. Gazprom has blamed the cuts on turbine maintenance.

In response to the reduced flows, European Union countries Tuesday reached a deal to voluntarily reduce gas consumption by 15% starting next month. In an emergency, the suggested cuts would become mandatory.

“The purpose of the gas demand reduction is to make savings ahead of winter in order to prepare for possible disruptions of gas supplies from Russia that is continuously using energy supplies as a weapon,” the bloc said in a statement.

Short-Term Outlook

Technically speaking, the main trend is up. The uptrend will be reaffirmed if buyers can take out the recent main top at $9.598. This could trigger an acceleration to the upside.

On the downside, the nearest support is $7.965 to $7.461.