Natural Gas Price Fundamental Weekly Forecast – Hurricane Nate Makes Landfall; Production Could Be Affected
Natural gas futures finished lower last week amid forecasts for rising production and mild weather over the next two weeks. This should be enough to lower demand for heating and cooling.
December Natural Gas futures settled at $3.046, down $0.135 or -4.24%.
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The market lost ground even after a government report showed a smaller-than-expected storage build last week.
According to the U.S. Energy Information Administration (EIA), utilities added 42 billion cubic feet (bcf) of gas into storage in the week to September 29, leaving the total of fuel in inventories near the five-year average for this time of year at around 3.5 trillion cubic feet.
The EIA number was below analysts’ 51-bcf forecast build and compared with a year-earlier increase of 76 bcf and the five-year average of 91 bcf.
Forecast
Investors will get the opportunity to react to the impact of hurricane Nate which made landfall over the week-end near Mississippi and Alabama. The hurricane could impact production which should be short-term bullish for natural gas. The size of any rally will likely be determined by how long it takes to get production back to normal.
Since Hurricane Nate is not expected to cause as much damage as Hurricanes Harvey and Irma, any production issues are not expected to last long.
The overall weather forecast is expected to be bearish for prices. Temperatures are expected to be mild which will lead to low national demand for natural gas.