Contracts based on US gas (NATGAS) are already up nearly 5.5% today. Energy markets are reacting today to OPEC+'s decision to extend production cuts. Despite the sizable gains in NATGAS quotations, the fundamental situation in this market puts crude in a curious position, where gas has to react to opposing information on weather forecasts and domestic demand in the energy market.
Below are some interesting charts depicting the fundamental environment in the gas market:
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Weather forecasts updated yesterday for the Lower 48 (continental US) indicate that the pressure of positive relative to historical average temperatures in the central and eastern parts of the US is reversing toward slightly cooler temperatures (in the short term, data that may increase pressure for downward revisions). Source: Bloomberg Financial LP
Despite the downward revision of weather forecasts, the estimated number of days of the cooling period is revised upward, thus coming out above the range of the 5-year average (potentially increasing demand in the medium term). Source: Bloomberg Financial LP
Overall demand for natural gas in the context of power generation returns to within the range of the 5-year average. Source: Bloomberg Financial LP
Natural gas is up 5.5% today, attempting to cap a downward impulse that has taken the quotation below the barrier near the $3 zone. Source: xStation
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