For weather that effects the natural gas market(Cooling Degree Days in the Summer help gauge residential natural gas use because natural gas is used to generate electricity for air conditioning:
From Natural Gas Intelligence:
August Natural Gas Called Near Even After Storage-Driven Rally
8:57 AM
The August natural gas futures contract was set to open Friday near even at around $2.769/MMBtu, holding onto Thursday’s gains as the market continued to digest the implications of this week’s bullish Energy Information Administration (EIA) storage report.
for week ending July 13, 2018 | Released: July 19, 2018 at 10:30 a.m. | Next Release: July 26, 2018
Working gas in underground storage, Lower 48 states Summary textCSVJSN | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Historical Comparisons | |||||||||||||||||||||||||
Stocks billion cubic feet (Bcf) | Year ago (07/13/17) | 5-year average (2013-17) | |||||||||||||||||||||||
Region | 07/13/18 | 07/06/18 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
East | 507 | 480 | 27 | 27 | 606 | -16.3 | 613 | -17.3 | |||||||||||||||||
Midwest | 501 | 477 | 24 | 24 | 731 | -31.5 | 666 | -24.8 | |||||||||||||||||
Mountain | 144 | 143 | 1 | 1 | 194 | -25.8 | 171 | -15.8 | |||||||||||||||||
Pacific | 259 | 260 | -1 | -1 | 292 | -11.3 | 309 | -16.2 | |||||||||||||||||
South Central | 838 | 843 | -5 | -5 | 1,136 | -26.2 | 1,025 | -18.2 | |||||||||||||||||
Salt | 230 | 238 | -8 | -8 | 320 | -28.1 | 291 | -21.0 | |||||||||||||||||
Nonsalt | 608 | 605 | 3 | 3 | 816 | -25.5 | 734 | -17.2 | |||||||||||||||||
Total | 2,249 | 2,203 | 46 | 46 | 2,959 | -24.0 | 2,784 | -19.2 | |||||||||||||||||
This was the 7 day period that was covered for the EIA report:
Storage is at the bottom of the 5 year average:
For ngq, 2.704 was the low (before the release of the very bullish EIA #).......cool temps in the forecast had been putting pressure on prices. However, a close higher yesteday was an upside reversal technical signal. .................new lows for the move, followed by a close higher.............the close was higher than the previous days high.
The future price depends a great deal the latest outlook for temperatures:
https://www.marketforum.com/forum/topic/8050/
Natural gas 3 months |
Naturalgas 1 year below
Naturalgas 5 years below
Naturalgas10years below |
By WxFollower - July 19, 2018, 5:31 p.m.
Today's EIA was tied with the EIA week ending 4/13 for the most bullish in relation to the DJ news survey mean for the most bullish since the very bullish report for the week ending 1/19/18. This being 5 lower than the prior (holiday) week on 16 fewer CDDs tells me there very likely was a heck of a demand drop due to the July 4th holiday week.
Regionally, the NE and Midwest/Mountain and Pacific injections rose/fell vs the prior week, which makes sense since they were significantly cooler/warmer for today's report. However, the south central was quite a bit cooler and yet had a -5 vs a +2 the prior week. That is counterintuitive although this may be because the holiday demand slowdown effect was possibly relatively large there thus raising the injection in the prior report enough so that today's number was more bullish despite the cooler wx.
Natural gas down to the lows of the day, 2.761(same as early morning lows) despite a (outlier) much warmer operational 12Z GFS solution.
Update:
NG took out those lows, dropping to 2.754 a few times just before and after the 1:30pm time frame. This was a test of the lows that occurred AFTER the release of the very bullish EIA report Thursday morning.
The last print of the day at 4pm, was 2.762.....down a tad from Thursday's close.
The high on Friday was 2.784 which occurred around 8:30am.
From Natural Gas Intelligence:
Day After Storage-Driven Rally, Natural Gas Futures Stable; SoCal Spikes Further
5:46 PM
Natural gas futures pulled back slightly during an uneventful session Friday, with prices stable one day after rallying on bullish government storage data. In the spot market, the mercurial SoCal Citygate extended its run higher ahead of more heat expected in California, while points throughout the Gulf Coast and Texas saw modest gains; the NGI National Spot Gas Average added 3 cents to $2.71/MMBtu.
“Longer term, it’s up to hotter patterns gaining momentum in early August, or weather sentiment will be viewed as neutral,” the firm said, noting that guidance “would likely need to be bullish to justify a sustained rally.”
Still, a bullish surprise from the Energy Information Administration’s (EIA) weekly storage report on Thursday suggested “hefty deficits are going to take longer to replenish than the markets were pricing in, making any hotter trends over the weekend or early next week important if they were to occur.”
EIA reported a 46 Bcf injection into Lower 48 gas stocks for the week ended July 13, roughly 10 Bcf below consensus estimates based on major surveys. The build also fell below the five-year average 62 Bcf injection. Stocks ended the period at 2,249 Bcf, 535 Bcf below the five-year average of 2,784 Bcf.
“If production continues at the same year/year (y/y) growth rate as June (up 8.1 Bcf/d) for the remainder of the refill season, we estimate that the season will end with storage at 3.5 Tcf (about 6% below average),” Jefferies LLC analysts said following EIA’s report.
“For storage to reach 3.8 Tcf, we estimate that production would need to average roughly 10 Bcf/d higher y/y for the remainder of the refill season (this would imply production averaging around 83 Bcf/d, well above current levels). In these scenarios, we assume power demand of plus 2.0 Bcf/d y/y, hold exports flat with recent levels, and assume no y/y changes in residential/commercial or industrial demand.”
"Looking ahead, The Desk’s Early View storage survey Friday showed 16 respondents on average anticipating a 39.1 Bcf build from EIA’s report scheduled this coming Thursday (July 26) for the week ending Friday (July 20). The survey produced a range of 30 Bcf to 50 Bcf. Last year, EIA recorded a 19 Bcf injection, while the five-year average is a build of 46 Bcf."
Seasonals based on historical prices..........this graph is pretty old.
If the weather forecast makes a decided turn towards heat in the Midwest and East later this month or in August, you will want to be long natural gas.