Natural Gas Fundamental Analysis, June 05, 2015 – Forecast
Analysis and Recommendations (Natural Forecast):
Natural Gas added 21 points to trade at 2.656 as traders took advantage of the weak dollar and low prices to buy up the commodity ahead of the weekly inventory report. Weather forecasts for the short term show temperatures spiking over the weekend increasing residential demands.
The market’s default position is to sell because of chronic oversupply, said Michael Doyle, a broker at Eclipse International Inc. in New York. Production is still at a near-record pace and hot weather isn’t coming to ramp up demand for gas-fired power to run air conditioners, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, said in a note.
Gains “were just overcooked yesterday,” he added. “We didn’t see enough shifts in the temperature views to justify” prices near $2.70/mmBtu.
The U.S. Energy Information Administration late Tuesday revised recently released first-quarter data that had shown falling production so that it now shows slightly rising production. EIA data showed production hit 73.5 billion cubic feet a day in the first quarter, a record and a 0.3% increase from the fourth quarter of 2014.
Strong production had oversupplied the market by 3 bcf a day two weeks ago, according to analysts. And many expect that to continue. Last week’s addition to storage may have hit 123 bcf, according to the median average of 19 forecasters surveyed by The Wall Street Journal. That would be among the five largest weekly surpluses in EIA data that goes back through 1994. EIA releases its weekly storage updates on Thursday.
All the indicators of oversupply reinforce the inclination to sell that has dominated the natural-gas market for nearly a year now, Mr. Doyle said. Gas prices have fallen in nine of the past 12 sessions.
AccuWeather US Forecast Outlook:
Following a southward push of cool, dry air at midweek, clouds, showers and higher humidity will return to the Northeast.
According to AccuWeather Chief Meteorologist Elliot Abrams, “How warm or cool people feel for the rest of the week is complex due to areas of clouds and sunshine versus rain and humidity.”
The routine movement of weather systems is slowing to a crawl as an atmospheric traffic jam sets up over the Eastern states.
While the bulk of rain will focus on the Southeast states with an ongoing risk of flash flooding, clouds and rain will march north into the Northeast again as the week progresses.
ForexTraq provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information for Natural in our weekly reports.
Natural Gas Weekly Update
Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)
Weekly Natural Gas Storage Report
Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)
Natural analysis forecast