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June Natural Gas Called Slightly Lower After Mix of Forecast Changes Over Weekend

June natural gas was set to open Monday about a penny lower at around $2.837/MMBtu as forecasters noted a mix of changes to guidance over the weekend, including more medium-term cooling demand and longer-term cooler risks for next month.

After last week’s gains, the technical picture suggested June has a strong chance to continue climbing this week, potentially testing resistance at $2.91 or maybe even $2.94, according to EBW Analytics Group CEO Andy Weissman.

“Last week’s rally stalled, however, at $2.87, and the track record this spring has been for natural gas to face strong headwinds every time it starts to rise,” Weissman said. While projected cooling degree days for Week 2 of the current outlook “increased significantly over the weekend, the next few days are milder than normal and temperatures are likely to be closer to seasonal norms for much of June.”

Prices could increase to start the week, but barring a “major forecast shift” from here, the potential for a string of larger storage injections should pull prices lower, according to Weissman.

The Desk’s Early View storage survey on Friday showed respondents on average expecting the Energy Information Administration (EIA) to report a 96.4 Bcf build for the week ending May 18. Last year, EIA recorded a 74 Bcf build for the period, with a five-year average injection of 89 Bcf.

Radiant Solutions said Monday its forecast for the six- to 10-day period (May 26-30) “trends notably warmer” compared to Sunday’s forecast “across the eastern half in a pattern that features warm themes across much of the U.S. Much aboves are now projected across the Midwest and East early in the period ahead of a cold front, with moderation taking place in the latter part as some high pressure passes to the north behind the front.”

Changes were mixed in the 11-15 day outlook (May 31-June 4), showing heat focused more in the West, with the Midwest and East more variable but still leaning to the warm side of normal, according to the firm.

“Models in general support these themes, although disagree in the details,” with the Global Forecast System “focusing heat more in the Rockies and Plains,” while European guidance “has heat being more focused over the Southwest,” Radiant said. “The South, meanwhile, remains on the cooler side of normal with unsettledness persisting.”

Bespoke Weather Services said it viewed the weekend forecast changes as more supportive for natural gas given an increase in medium-range cooling demand.

Through the next two weeks, there’s an expectation that gas-weighted degree days “are again able to remain slightly above seasonal averages, though cool risks across the Southeast will still limit the extent of bullish weather,” Bespoke said. Looking ahead to the third week of the outlook “cooler concerns continue to dominate, however, with teleconnections and climate guidance both showing the potential for cooler risks to return across the eastern third of the country.”

June crude oil was set to open Monday about 11 cents higher at around $71.39/bbl, while June RBOB gasoline was trading fractionally lower at around $2.2282/gal.

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