A Cool End To July Hits Natural Gas Again

The July natural gas contract attempted to rally this morning for reasons outlined for clients in our Note of the Day, but it reversed and settled lower on cooler forecasts that showed limited cooling demand to close out July. 

(Click on image to enlarge)

natural gas commodity weather

This reversal was forecast in our Morning Update, where we noted a sizable drop in our GWDD forecast from yesterday. 

(Click on image to enlarge)

natural gas commodity weather

Our Morning Update outlined exactly why the morning bounce was likely to fail and why prices would fall through the afternoon.  

(Click on image to enlarge)

natural gas commodity weather

Prices did not quite reach $2.8 and proceeded to then sell off through the day. We saw strong signaling along the natural gas strip that led to the increased confidence this morning that the bounce would fail. The entire strip took a solid loss today, as seen below.  

(Click on image to enlarge)

natural gas commodity weather

The result was that the V/F October/January spread that we have been watching here barely moved at all on the day despite a two-cent decline in the prompt month contract. 

(Click on image to enlarge)

natural gas commodity weather

The Climate Prediction Center picked up on these cool trends in their latest update this afternoon.  

(Click on image to enlarge)

natural gas commodity weather

This comes far after we first alerted clients to bearish risks today, though, in our Morning Text Message Alert at 6:41 AM Eastern. Though prices did not quite get to $2.72 they dropped down to $2.731 after touching $2.788.  

natural gas commodity weather

Moving into the day tomorrow we should see prices increasingly driven by speculation around the Thursday EIA print, where we have seen a rather wide range of estimates (from the upper 40s to the mid-60s). We have been outlining our expectation for the Thursday print each day for clients, and today in our Seasonal Trader Report provided both our updated 5-month GWDD forecast and seasonal storage model, which integrates our seasonal forecast with the latest weather-adjusted natural gas balance to forecast end of injection season storage levels and potential impacts on natural gas prices. 

To give this report a read, and begin receiving all our latest weather and natural gas-driven analysis, try out a 10-day free trial ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.