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Basic Daily Natural Gas Price Forecast – Buyers Take Advantage of Warm Mid-Month Forecasts

Natural gas futures closed up just over 1% on Friday as weather forecasts indicated the heat expected for mid-August. It is clear that the effect of this news is that electricity companies will have to continue burning gas to produce energy that will serve the cooling of homes and businesses, so that they will not be able to inject the same gas into the national reserves for the winter.

On Friday, the September natural gas futures they settled at $8.229, up $0.095 or 1.17%. The IS United States Natural Gas Fund (UNG) ETF it ended at $28.62, up $0.28 or 0.99%.

On a weekly basis, the contract fell less than 1% after gaining about 45% over the previous three weeks, and on a monthly basis the contract was on track to gain about 52% after falling about 33 % in June. Regarding this figure, it should be noted that it represents the largest monthly increase since the record 63% increase in September 2009 was registered.

High coal prices make natural gas attractive

According to Reuters, gas plants have provided more than 40% of the United States’ energy this month, according to federal data from the energy sector, although gas prices have risen 52% so far this July to partly because coal prices continue to hit new highs. all-time highs. The result of that spike in coal is that some producers find it unprofitable to use it in their plants.

Refinitiv supply and demand projections

Data provider Refinitiv has said that the average gas production of the 48 continental US states has increased in July to 96.2 million cubic feet / day (bcf / d), compared to 95.3 bcf / d for June. Remember that the monthly record is 96.1 bcf/d and was registered in December 2021.

Refinitiv also estimated that average US gas demand, including exports, would fall slightly from 99.5 bcf/d this week to 98.1 bcf/d next week on the loss of heat intensity. heat returns.

“tight warm and bullish” weather pattern.

Forecasters are expecting strong demand during the week which is about to start after a short break over the weekend.

Data from the US National Weather Service (NWS) showed rainy conditions and milder temperatures in the 70s to 80s in the upper Midwest and New England over the weekend, slightly reducing refrigeration demand that had skyrocketed following the arrival of the heat wave in July. .

Still, highs of 90 degrees F were forecast across most of the South and West through the weekend, with temperatures reaching 100 degrees F in parts of Texas, Nevada, Arizona and California.

Those conditions are expected to hold in those areas, then spread into most of the lower 48 US states over the next week, NatGasWeather said, calling the overall pattern “firmly warm and bullish” for natural gas prices.

Mid-Autumn Natural Gas Daily Chart

short term projections

Remember that the week started with a strong rise in natural gas prices and after approaching the psychological figure of $10.00, due to the prospect of intense heat coming in the middle of the month, the market received downward pressure from the entry of sellers.

At a technical level, traders have two options: Buy high and wait for a break above $10.00, or wait for the market to value a pullback to the short-term support zone between $7.372 and $6.888, and then 6,557 to 5,839 dollars.

If the heat expected for the middle of the month is confirmed on Sunday, the decision will be easier.

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