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August Seen Up 5 Cents, But Analysts Acknowledge Rangebound Market

August natural gas is expected to open 5 cents higher Wednesday morning at $2.78 as traders continue to focus on supportive weather, but they concede the market needs to break recent highs to re-establish any uptrend. Overnight oil markets fell.

Forecasters still see a warm pattern in place, but  tempered by periodic bouts of cooling. "The latest weather data continues to advertise very warm to hot temperatures the next couple days over all but the Northwest and north-central U.S., but then with several degrees of cooling spilling across the Great Lakes, Mid-Atlantic and Northeast late this week through the coming weekend," said Natgasweather.com in a noon Tuesday report.

"Although, the weather data is still showing a very strong ridge of high pressure next week over much of the country, with record setting temperatures...this has trended a bit slower in setting up with the hottest temperatures focused on the central and southern U.S., including the Midwest, while the East Coast warms, but likely not as impressively. Next week's hot ridge does look fairly intimidating, so it could spook the markets, but we continue to see the same issue."

For the week ended July 16, the National Weather Service forecasts above-normal cooling degree day requirements in major markets. New England is expected to see 61 CDDs, or 20 more than normal, and the Mid-Atlantic states of New York, New Jersey and Pennsylvania should simmer under 69 CDD, or 13 more than than what it normally sees. The greater Midwest from Ohio to Wisconsin is anticipated to see 73 CDD, or 17 above normal for this time of year.

Tim Evans of Citi Futures Perspective saw the market turn higher Tuesday "supported by a warmer temperatures forecast that added some power sector demand to the market balance for the next two weeks."

Market analysts see no immediate trend to natural gas prices. "Natural gas is now sitting in the same position the rest of the petro complex has been stuck in since early June," said Brian LaRose, a technical analyst with United ICAP. "Bears need to crash through the 0.236 retracement at $2.671 and a=c down from the $2.998 high at $2.570 to signal a top is in. Bulls need to bust through the $2.998 high to keep the up-trend going.

"As long as we are stuck between support and resistance we sit on our hands."

 In overnight Globex trading August crude oil fell 42 cents to $46.38/bbl and August RBOB gasoline gave up 2 cents to $1.4170/gal.

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