After heavy selling last week, natural gas futures bounced back somewhat in early trading Monday as analysts pointed to supportive export and production data. The September Nymex contract was up 5.0 cents to $3.911/MMBtu at around 8:50 a.m. ET.
With the weather outlook “largely unchanged” compared to previous expectations, analysts at EBW Analytics Group pointed to higher liquefied natural gas (LNG) feed gas demand and lower production as possible contributing factors to the rise in futures early Monday.
“Wind generation, however, which dropped sharply over the weekend and remains weak today, is expected to rebound tomorrow, constraining prices at Henry Hub,” the EBW analysts said.
Now that peak summer demand has most likely passed and the market is looking ahead to the end of the season, prices could come under downward pressure near-term, according to the firm.
“Over the next few days continued selling pressure is possible,” the EBW analysts said. “Given the current storage trajectory, support is likely to hold soon. Precisely when and where gas prices will bottom out is difficult to predict.”
Bespoke Weather Services made no major changes to its latest 15-day forecast Monday, though the firm did highlight a few days of projected near-normal gas-weighted degree day totals expected at the end of the month.
“This may be temporary, however, as the atmosphere remains in a La Nina base state, which correlates to above normal heat more often than not as we move through the back half of the summer season,” Bespoke said. “We still see a solid period of above normal heat from later this week into the start of next week, driven by hotter than normal conditions in the Midwest and East, though not as strong as last week’s heat.”
As for prices, Bespoke said the early bounce “makes sense” given the low $3.80s represents “a solid technical support level…Should data continue to show re-tightening of balances, we could easily push back toward the $4 level as the week moves along, pending cash prices.”
ICAP Technical Analysis analyst Brian LaRose said the firm’s focus to start the week will be on support for the September contract.
“The two bands that have our attention to start the week are $3.825-3.784 and $3.715-3.681,” LaRose said in a note to clients. “Need both decisively broken to signal we could have a more serious top on our hands.”
September crude oil futures were down $1.97 to $66.47/bbl at around 8:50 a.m. ET.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |