After closing lower on Friday following unsuccessful counter-trend trader attempts to establish a support base, Natural Gas Futures opened Monday with more losses.
Having ended the week 3.7% lower than the last week, also a negative week, Natural Gas Futures saw demand last week fall to its lowest levels for the same week since 2016.
Whilst other commodity markets including crude oil, Brent oil and gold all posted gains on Monday’s early trading, Natural Gas futures are down 2.62% trading at $2.531
Mild temperatures and light heating demand in North America and Western Europe weigh heavily upon demand levels for Natural Gas. Also, impacting prices are increased production levels.
According to EIA Inventory reports, production recovered quicker than demand after February’s big Arctic freeze. Dan Myers, an analyst at Gelber & Associates said:
“Production’s rapid recovery has been the big surprise for the market,”
“On the demand side, it appears to have taken longer to normalize than many folks thought.”
Dan Myers
Weather Outlook Favourable to Natural Gas Prices
With the cold snap in February not extending into March, the weather was has mild in much of the US and Europe. Temperatures in the US were mostly mild to warm with highs of 40s to 60s across the north. In the South, temperatures were between the 70s and 80s.
However, temperatures are expected to cool a bit, boosting demand in the US in the short term. NatGasWeather said:
“A fresh cold shot will push into the Great Lakes and Northeast this weekend with chilly lows of 10s to 30s for stronger demand, while the Plains storm weakens. A milder break with highs of 50s to 70s will set up over the eastern half of the U.S. next week ahead of another cold shot arriving into the Midwest,”
NatGasWeather
Despite this, the weather outlook is biased to warmer than normal overall which should keep the pressure on Natural Gas Futures prices.
