Amid continued production weakness in updated estimates, along with sweltering summer temperatures in the latest forecasts, natural gas futures rebounded in early trading Wednesday.
After settling 26.3 cents lower in the previous session, the August Nymex contract had recovered those losses as of around 8:50 a.m. ET. The front month was up 35.7 cents to $6.520/MMBtu.
The August contract retreated in Tuesday’s after failing to break through technical resistance earlier in the session, EBW Analytics Group analyst Eli Rubin said. The declines also coincided with “a widespread sell-off across the broader commodity complex.”
Looking at the supply picture, the production losses that emerged in estimates Tuesday remained evident in early-cycle pipeline nominations as of early Wednesday, according to Rubin.
“If supply fades ahead of peak summer heat, it could reinforce upward pressure for the August contract into late July,” Rubin said.
The “scorching” temperatures over the central Lower 48 are “the primary near-term bullish driver” for natural gas prices. “As heat intensifies in late July, further upside amid volatile conditions appears the most likely outcome,” Rubin added.
The latest six- to 10-day forecast from Maxar’s Weather Desk, covering next Monday through July 22, underwent modest hotter trends in the Southwest and slightly cooler trends in the Midwest.
“Otherwise, similar themes as in the previous outlook are retained and include widespread above normal temperatures,” the forecaster said.
Highs during this period include a peak of 101 degrees in Denver, mid-100s in Dallas and low 90s in Chicago, according to Maxar.
Further out in the 11-15 day period, from July 23-27, “above normal temperatures look to remain widespread,” particularly in the early part of the period, the forecaster said.
“The models retrograde ridging back toward the West during the second half, with the West being hottest for then while the East moderates,” Maxar said.
© 2022 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |