Amid signs of easing heat by early next month, natural gas futures gave back the previous session’s gains in early trading Wednesday. The August Nymex contract was down 3.1 cents to $1.644/MMBtu at around 8:40 a.m. ET.
As of early Wednesday, the latest forecast outlook continued to trend cooler, showing more evidence of a “cooler trough” moving into the eastern half of the nation late this month into early August, Bespoke Weather Services said in a note to clients.
“We believe this is temporary and that heat can return to the East as we move deeper into August, but the cooler momentum may not be finished yet,” the forecaster said. “As such, we remain on the cool side of guidance.”
Despite the cooler trends, Bespoke said it still projects above-normal gas-weighted degree day totals for the next 15 days.
Meanwhile, “the tropics are starting to awaken, with an outside shot at a named storm in Texas in two to three days,” the forecaster said.
The National Hurricane Center (NHC) was monitoring a disturbance over the eastern Gulf of Mexico early Wednesday that it said had a 40% chance of cyclone formation over the next 48 hours.
“Gradual development of this system is possible while it moves west-northwestward, and a tropical depression could form during the next few days,” the NHC said.
The August natural gas contract closing above $1.67 Tuesday could create an opening for prices to push toward resistance around $1.70-1.73 in Wednesday’s session, according to analysts at EBW Analytics Group. However, they cautioned that “the ability to achieve further gains today is unclear.
“Cash prices remain weak, and the 15-day forecast continues to shed” cooling degree days, the EBW analysts said. “Even if the August contract posts further gains today, however, with prices at Henry Hub in the low- to mid-$1.60s and likely to decline significantly further next month, futures are expected to head back down soon.”
At ICAP Technical Analysis, analyst Brian LaRose saw “no change” in the technical outlook for the August contract following Tuesday’s close.
“Would need to see the bears force natural gas below both $1.604 and $1.537-1.517 to get the green light to target lower levels,” LaRose said. “As long as the bulls can keep natural gas above support the door is open for some sideways to higher price action near term. To have a case for higher rather than just sideways price action bulls would need to lift natural gas above $1.765.”
September crude oil futures were down 60 cents to $41.32/bbl at around 8:40 a.m. ET, while August RBOB gasoline was off about 1.4 cents to $1.2662/gal.
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