Natural Gas Fundamental Forecast – July 25, 2016

Natural Gas climbed 24 points to 2.716 as the weather turned hotter and on lower inventory and production data from the EIA.  The latest weekly natural gas storage report from the US Energy Information Administration (EIA) recorded an increase of 34bn cubic feet (Bcf), which was significantly below expectations of a build of around 40bn and compared with an increase of 64bn Bcf the previous week.

The lower than expected increase in inventories will provide some short-term relief to the market, although markets will become increasingly concerned if inventories remain well above the five-year average over the next few weeks.

Supplies were 471 Bcf higher than this time last year and 559 Bcf (20.6%) above the five-year average from 21.1% last week. Overall stocks are running at 3,277 Bcf and still above the ceiling of the five-year range despite an overall moderation in the inventories build over the past two months.

Hot summer temperatures are expected to dominate weather in the Lower 48 states as we head into the weekend and last for several days next week. Dangerously high heat index levels are possible for Texas and much of the south, central and eastern United States. Overall demand for natural gas is expected to be high to very high next week.

Natural Gas Weekly Weather Outlook (www.natgasweather.com)

July 21 – July 27: Hot high pressure will dominate much of the US through the coming weekend with widespread 90s to 100s, including all of Texas. Hot and humid conditions will combine to increase the Heat Index to dangerous levels over large portions of the central, southern, and eastern US the next several days, including into major cities such as Chicago and then NYC city this weekend. Over the West, weather systems will keep conditions slightly cool over the NW, but still hot over interior California and the SW. Overall, nat gas demand will be HIGH to VERY HIGH the next 7-days.

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Natural Gas Weekly Update
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Weekly Natural Gas Storage Report
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