Futures for natural gas rose higher in the mid-session on Tuesday in response to overnight forecasts to demand slightly more heat than originally expected. There were no major shifts in the weather forecast, but just enough to limit some of the sales pressure from Monday’s route.
At 16:48 GMT, natural gas traded at $ 2,191 in September, up $ 0.035 or + 1.86%.
Mixed Outlook for liquefied natural gas
Some of the strengths have been attributed to increasing demand for liquefied natural gas (LNG) to feed gas, according to Genscape, Inc. The company’s estimates show that LNG demand for gas reached a total of 4.5 Bcf / d after last week, the highest level since the end of June.
“These recent gains have been driven by the return of Freeport LNG to service after no nominations from July 7 to July 29, and a rise in deliveries to Corpus Christi LNG,” said Genscape analyst Josh Garcia.
Natural Gas Intelligence (NGI) reported that analysts at Energy Aspects said their recent supply / demand balance gauge did not show enough density to fully justify the rise in natural gas prices, with inventories still on track to extend the injection season go on an estimated 3.9 Bcf. Fundamentals are “not significantly different from what we had expected before the start of the month.
Energy Aspects analysts say recent data suggests that the rise in prices has caused additional hedge activity for 2021, activity they see “lock in more production than indicated by 2Q2020 revenue calls and help producers support production to their lenders in the current environment. “
Water short for short term
According to NatGasWeather for August 11 to August 17, “Extremely hot to hot conditions will rule much of the U.S. today with heights from the upper 1980s to the mid-1990s, 100 southwest deserts in California for high national demand. Cooler exceptions continue over the Midwest as weather systems continue with showers and pleasant highs from the 70s to lower 80s.The Northeast will be hot on Tuesday – Wednesday with upper 80s to lower 90s, then cool in the 80s Thursday – Saturday to reduce national demand. will come across the Midwest and East Central US early next week with highs ranging from the 70s to 80s to reduce national demand to moderate.
Short-term Outlook
Based on the price action over the last five sessions, the direction of the September natural gas futures contract over the full term is likely to be determined by response from traders at the main Fibonacci level at $ 2,149.
Bullish Scenario
A sustained move above $ 2,149 will indicate the presence of buyers. If this can create enough upside momentum, then look for a possible breakout over the small top at $ 2,284. The daily chart indicates that there is enough room for the top with the May 5 top at $ 2,499 the next big upside target.
Bearish Scenario
A sustained move below $ 2,149 will signal the lack of buyers as stronger selling pressure. This will not change the downward trend, but it may lead to a test of the longer term 50% level at $ 2,041, closely followed by the short term Fibonacci level at $ 1,973. Since the main trend is up, buyers could come in on a test of these levels.
Page notes
Although the market maintains support, the price action is more indicative of sideways rather than buying bonuses. This is probably because of the mixed outlook for demand for LNG and the changing weather pattern that could lead to a decline in demand.
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