Natural gas prices are currently trading near $4.063, a slight decrease from the recent high of $4.187 set on July 26. The National Oceanic and Atmospheric Administration's (NOAA) forecast for milder weather from July 31 to Aug. 4 is keeping gas prices under pressure. The NOAA announced on Monday that cooling demand in the United States for the week ending July 31 is expected to be 14 cooling degree days higher than the long-term average for this time of year, indicating increased air-conditioning use. A cooling degree day (CDD) is a metric for calculating the amount of energy required to cool a building. However, NOAA predicts milder weather in the Midwest and Northeast from July 31 to Aug. 4, putting downward pressure on natural gas prices.
Natural gas prices have surged substantially in recent days amid concerns that high summer weather in the US will raise natural gas demand from electricity providers to fuel increasing air conditioning use, further depleting already low US natural gas supplies. Inventories are -16.7 percent lower than a year ago and -6.2 percent lower than the five-year average.
According to the weekly EIA report released last Thursday, natural gas inventories in the United States increased by +49 billion cubic feet to 2,678 billion cubic feet in the week ended July 16, exceeding the consensus of +43 billion cubic feet and the 5-year average of +36 billion cubic feet for this time of year.
Export demand aided gas prices, while electricity production, domestic demand, and US gas production kept prices under pressure. According to Bloomberg, gas flows to US LNG export facilities were 10.9 billion cubic feet (bcf) on Monday, up 6.4 percent year over year. Natural gas consumption was down -2.8 percent y/y at 70.3 bcf on Monday, according to Bloomberg statistics, while gas output was up +1.8 percent y/y at 91.481 bcf. Natural gas consumption was down -2.8 percent y/y at 70.3 bcf on Monday, according to Bloomberg statistics, while gas output was up +1.8 percent y/y at 91.481 bcf.
Baker Hughes reported that the number of active US natural gas drilling rigs in the week ending July 23 stayed stable at 104, a 1-1/4-year high, significantly above the record low of 68 rigs set in July 2020.
Natural gas futures' net short holdings climbed by 8 138 contracts to 127 542 contracts, according to the CFTC's Commitments of Traders report for the week ending July 20. The number of speculative long positions fell by 1672 contracts, while the number of speculative short positions increased by 6466 contracts.
Natural gas prices are projected to hold steady while trading above key support levels such as the 20-day EMA of $3.808 and the 50-day EMA of $3.514; however, resistance is expected at $4.277 and $4.367.