Natural Gas futures dropped down in early trading Monday, following a cooler shift in forecasts over the weekend. At 8:50 a.m., the September Nymex contract was down 6.1 cents to $4.079/MMBtu. ET. According to Bespoke Weather Services, the current temperature forecast trended significantly cooler than expected entering into the weekend as of early Monday. Cooler weather is expected to arrive early next week, according to the firm.
Compared to earlier forecasts, Bespoke said, “We do still see above normal heat in the Midwest to East as we head into the final third of the month, however, so the forecast as a whole remains bullish versus even the five-year average, just slightly less so.” Prices are likely to be impacted by August temperatures and movements in the physical market moving forward, according to experts at EBW Analytics Group, after the September contract climbed last week but failed to break through barrier at $4.205.
Early this week, prices at Henry Hub may be restrained due to strong increases in wind power, but day-ahead prices may rise later in the week as national cooling degree day totals are forecast to reach their highest level of the year. Similarly, data on power burn suggests that stronger wind and nuclear output should help to reduce Natural Gas consumption in the electric sector this week, according to Bespoke.
This week, we expect tumultuous price movement, and we can’t rule out further short-term falls if data reveals any weakness with greater renewables output. Nonetheless, the firm sees the Natural Gas market as having a “supportive” overall outlook. We expect any price decreases to be bought, since output is still not at a level that provides much comfort in terms of the storage picture as the injection season nears its end, especially with higher-than-normal weather demand remaining.