Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

More Challenges For Natural Gas Pricing As ‘Shoulder Season’ Beckons

By Investing.com (Barani Krishnan/Investing.com)CommoditiesAug 22, 2019 09:40
uk.investing.com/analysis/more-challenges-for-natural-gas-pricing-as-shoulder-season-beckons-200432123
More Challenges For Natural Gas Pricing As ‘Shoulder Season’ Beckons
By Investing.com (Barani Krishnan/Investing.com)   |  Aug 22, 2019 09:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The “shoulder season” for natural gas is looming on the market, bringing with it the woe of weak demand and pricing that could further challenge the fuel’s key $2 support.

With the end of last week’s warmth that briefly boosted air-conditioning demand, temperatures are expected to ease by this weekend in the key gas-fired power generation zone of the U.S. Northeast, as more variable weather patterns take over.

To analysts such as Dan Myers of Gelber & Associates in Houston, that could only mean one thing: a new round of price pressures as the onset of amiable conditions that require little or no cooling lead to greater storage rather than burning of gas.

Said Myers:

“Although the western U.S. continues to bake through the end of August, key population centers will get a break (from the heat) and end the latest round of near-record natural gas power demand.”

Ahead of Thursday’s weekly gas storage report due from the U.S. Energy Information Administration at 10:30 AM ET, analysts are forecasting a rounded up estimate of 60 billion cubic feet (bcf) in gas injections for the week ended Aug. 16.

At 60 bcf, the latest weekly addition to storage would be 25% higher than a year ago, considering there was an injection of just 48 bcf during the week ended Aug. 17, 2018. It would also be higher than the five-year (2015-2019) average injection of 51 bcf for the week.

Myers said he expected the “final crescendo of summer temperatures” in the Northeast and other key gas-fired power generation belts during the current week to Aug. 23.

Dominick Chirichella, director of risk and trading at the Energy Management Institute in New York, concurred with that view, saying:

“The driver remains the cool down that gets underway in the 6-to-10 day forecast and spreads across a larger geographical area in the 11 to 14 day period."

“In addition, the market is expecting an above normal injection into inventory further helping to keep any remaining bulls on the sidelines.”

At Wednesday’s settlement, the benchmark September gas contract on New York Mercantile Exchange’s Henry Hub fell 4.8 cents, or 2.2%, to $2.17 per million metric British thermal units (mmBtu).

For now, there is little immediate risk of the contract losing the key $2 per mmBtu support, with its 18-cent buffer above the $1 bracket.

NatGas 300-Min Chart - Powered by TradingView
NatGas 300-Min Chart - Powered by TradingView

But on the other hand, the dismal price action in recent days once again leaves the market poised for a week in the red, resuming a trend broadly seen since mid July. Until last week’s near 4% rally, Henry Hub’s benchmark gas futures contract lost a cumulative 14% over four weeks. In the current week, the contract is starting at a loss of 1.6%.

Investing.com’s Daily Technical Outlook has a “Neutral” call on natural gas, projecting a bottom of $2.057 and top-end resistance of $2.297.

Myers said the return of cooler-than-normal temperatures in a large swath of the United States will allow injections to climb going into the shoulder season:

“There’s potential to send the market even lower in the coming days.”

More Challenges For Natural Gas Pricing As ‘Shoulder Season’ Beckons
 

Related Articles

Dmitriy Gurkovskiy
Crude Oil is Feeling Down Again By Dmitriy Gurkovskiy - Nov 22, 2021

Early in another November week, the Brent price went down again – it is trading at $78.75 and remains below the psychologically important level of $80, thus making market players...

Anastasiia Scavo
Gold Is Looking for a Rally By Anastasiia Scavo - Oct 22, 2021 1

When I was recently looking at the gold prices chart from the perspective of the coming months, I saw minor indications that prices may break through the strong resistance around...

More Challenges For Natural Gas Pricing As ‘Shoulder Season’ Beckons

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email