Warm Weather Forecast Halts Natural Gas Price Decline
Today’s Spotlight Market
Speculators have a mixed opinion as to the direction for Natural Gas prices according to the Commitment of Traders (COT) report. For the reporting period ending June 17th, non-reportable traders, normally large speculators and commodity funds, were net-short 99,361 contracts, while non-reportable traders, small speculators were net-long 49,312 contracts.? Breaking the stalemate were commercial traders who are net-long over 50,000 contracts according to the latest COT report.??
Fundamentals
Natural Gas futures prices have been in a slump of late as larger than anticipated storage injections have alleviated some of the concerns of very tight Gas supplies this winter. The harsh winter of 2013-14 left U.S. Gas storage levels more than 1/3 below the 5-year average for this time of year, just as the summer cooling season is set to begin.? Natural Gas is normally placed into storage starting in April and increases through the month of October when the ?official ?start of the winter heating season begins on November 1st.? However, an outbreak of above normal temperatures this summer could trigger much greater usage of Gas for use in power production, which could hamper the amount of Gas placed in storage during the ?dog days? of July and August. The 8 to 14 day weather outlook from the Climate Prediction Center has a majority of the U.S. experiencing above normal temperatures to start the month of July, including almost the entire region to the east of the Mississippi river. Should this above normal temperature forecast continue, it may become difficult, even with increased Gas production, to meet the Energy Information Administration?s forecast of 3.42 trillion cubic feet gas to be in storage at the start of the heating season on November 1st.?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for August Natural Gas, we notice prices trying to stage a ?reversal? on the daily chart as prices rebounded from nearly 1-month lows on Tuesday to close sharply higher to end the session. Prices are holding inside the major moving averages (MA), trading just below the 20-day MA but well above the longer-term 200-day MA. The 14-day RSI has moved back into neutral territory with a current reading of 47.39. Major support is seen at 4.296, with resistance seen at 4.893.
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