Natural Gas Price Fundamental Weekly Forecast – Strong LNG Demand Could Set Weekly Tone

NatGasWeather said deficits may shrink back to near the five-year normal in time for more impressive summer heat to begin building in late May.
After posting a strong gain last week and changing the trend to up on the daily chart, natural gas bulls are hoping that the market continues to remain supported by solid liquefied natural gas (LNG) demand and forecasts calling for more heat. Traders will also be monitoring the weekly storage data, which provided an unexpected boost last week.

Last week, June natural gas futures settled at $2.818, up $0.064 or +2.32%.
Weekly Weather Forecast
According to NatGasWeather for April 26 to May 2, “A weather system with chilly morning lows of 20s to 40s and highs of 50s and 60s will exit the Northeast Monday. A second system will bring showers in the West, while also slightly cool with highs of 50s and 60s. The rest of the U.S. will see upper high pressure provide comfortable highs of 60s to 80s for much lighter national demand. Later in the week, a weather system over the West will track into the central U.S. Wednesday – Thursday with showers, then across the Northeast Friday – Saturday with slightly cool highs of 50s and 60s for a minor bump in national demand. Overall, low to locally moderate demand the next 7-days.”
US Energy Information Administration Weekly Storage Report
The EIA reported last week that domestic supplies of natural gas rose by 38 billion cubic feet (Bcf) for the week-ended April 16. That just about matched an average increase of 37 Bcf forecast by analysts polled by S&P Global Platts.

Total stocks now stand at 1.883 trillion cubic feet (Tcf), down 251 Bcf from a year ago but 12 Bcf above the five-year average, the government said.

Weekly Forecast
The May futures contract expires this week so we could see some volatility.

Traders will also be monitoring LNG activity, which has been very supportive lately.

“LNG exports and pipelines exports to Mexico, increasingly important components of U.S. demand for natural gas, have been very strong – and could remain so for the next several months,” said EBW Analytics Group.

NatGasWeather said the coming span of mild weather may result in the deficits shrinking back to near the five-year normal in time for more impressive summer heat to begin building in late May or early June.

Finally, there is speculation that we could see another big move after Thursday’s government storage inventory report. Natural Gas Intelligence wrote that early data ahead of the Energy Information Administration’s (EIA) report showed injection estimates ranging from 7 Bcf to 13 Bcf. NGI’s model projected a 13 Bcf build.

This compares with last year’s 70 Bcf injection and the 67 Bcf five-year average build, according to the EIA.