U.S. natural gas futures are rising shortly after opening in New York on Tuesday, partly on the release of an early report showing declining daily output but also weather forecasts showing higher-than-expected temperatures in the first part of July.
The effect of these conditions is likely to be for electricity producers to use more gas to cool homes and businesses. The July futures contract, on the other hand, expired today, so it will certainly have helped to generate some of the volatility that we have seen.
Refinitiv reports lower daily production
Data provider Refinitiv has reported that average gas production in the 48 continental U.S. states has fallen to 95.1 billion cubic feet per day (bcf / d) so far in June, from 95.2 bcf / d for the month of May.
On a daily basis, production is on track to drop by 1.8 bcf / d to a pre – fortnight minimum of 94.3 bcf / d.
Refinitiv sees higher demand on the horizon
With the advent of warmer conditions, Refinitiv expects average US gas demand, including exports, to rise from 94.0 bcf / d this week to 95.9 bcf / d next week.
NatGasWeather believes that a “pretty bullish pattern” is developing
The latest simulations from U.S. and European weather models showed significantly warmer trends from the previous day, announcing a “pretty bullish pattern” for the first 12 days of July, according to NatGasWeather.
The current pattern is “warm enough” to affect natural gas markets, but closing the Freeport export terminal would have a more significant impact, according to the company.
Basic Daily Forecast
Technically the main trend is down, but new buyers can be expected if there is a steady movement above the key zone of $ 6,587 to $ 5,865.
Prices could accelerate to the upside if buyers can break through the minions at $ 6,950, especially if this encourages speculative buying and prolonged coverage by sellers, in which case we could go all the way to the short-term zone $ 7,854 to 8,276.
NatGasWeather added: “Our view is that if above average heat continues for most days in July and August, as we would expect, the damage is likely to be reduced. will apply to the closure of Freeport during this period. “
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