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Natural Gas Prices Expected To Remain Steady

By Abhishek BansalCommoditiesJul 23, 2021 02:57AM ET
Natural Gas Prices Expected To Remain Steady
By Abhishek Bansal   |  Jul 23, 2021 02:57AM ET
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Natural gas prices for the August contract are hovering at 4.015, slightly higher than the previous day's close. Natural gas prices in August recovered on Thursday, owing to expectations that hot summer weather in the United States may increase gas demand from electricity providers.

The use of an air conditioner consumes a lot of energy due to the hot weather. The data agency Maxar predicted warmer-than-average temperatures for most of the United States on Thursday, with the North-Central region being the warmest from July 27 to 31, according to Maxar. From Aug. 1 to 5, temperatures in the West and the Central United States are forecast to be above normal.

The EIA weekly inventory data, on the other hand, was bearish for gas prices. Natural gas stocks in the United States increased by +49 billion cubic feet last week, exceeding the consensus estimate of +42 billion cubic feet. Furthermore, a decrease in domestic gas consumption hurts prices. According to Bloomberg data, on Thursday, US natural gas consumption was down -8.3% y/y to 67.1 bcf. According to Bloomberg statistics, gas flows to US LNG export facilities were 10.9 billion cubic feet on Thursday, down -1.5 percent from the previous week.

Electricity output in the United States has a negative impact on natural gas demand. Total US power output declined -2.4 percent y/y to 89,603 GWh (gigawatt hours) in the week ending July 17, according to the Edison Electric Institute, while cumulative US electricity output in the 52-week period ending July 17 grew +0.9 percent y/y to 3,995,676 GWh.

According to Bloomberg data, US lower-48 gas production was 91.252 bcf on Thursday, increasing +2.4 percent year over year.

Last Friday, Baker Hughes reported that the number of active US natural gas drilling rigs increased by 3 rigs in the week ending July 16, reaching a 1-1/4-year high of 104 rigs, significantly above the record low of 68 rigs set in July 2020.

According to the CFTC Commitments of Traders report, the net short position in natural gas futures increased by 11350 contracts to 119404 contracts for the week ending July 16. The speculative long position was reduced by 4640 contracts, while the short position was increased by 6710 contracts.

Natural gas prices are expected to trade steady while remaining above a critical support level of $3.832-$3788, while modest resistance is expected near $4.178-$4.295.

Natural Gas Prices Expected To Remain Steady

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Natural Gas Prices Expected To Remain Steady

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Comments (1)
Marwa Al riyami
Marwa Al riyami Jul 23, 2021 4:11AM ET
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So it is buy to the next week?
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Disclaimer: Mr. Abhishek Bansal is a new-age, first-generation entrepreneur, and the Founder Chairman of Abans Group, a quintessential diversified business group, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, and Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management.
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