⏫Natural Gas Rebounds Nearly 2%

Following initial declines, natural gas prices are showing a distinct rebound amid expectations of higher temperatures in the coming weeks.

Natural gas had been under pressure since June 20, due to lower-than-initially-expected demand from gas-fired power plants. Consequently, inventory builds in recent weeks have been larger than typical. However, temperatures remain elevated, and the latest forecasts indicate that July and August are set to be very warm. Recent data from last week showed that inventories increased slightly more than anticipated but less than the five-year average. If this trend persists in the coming weeks, inventories will approach the five-year average. Seasonally, gas typically bottoms out around the turn of June and July.

Temperatures in most states are forecast to be higher than normal. Source: NOAA

Gas inventories have recently risen slightly less than expected. Inventory growth should be limited in the coming weeks. This is a crucial seasonal period for gas market gains. Source: Bloomberg Finance LP

Seasonally, gas should currently be in an upward trend. Source: Bloomberg Finance LP, XTB

Gas prices are rebounding today, despite opening with a downward gap. Gas is approaching the 200-session moving average. If it succeeds in breaching this level, it will mark another false breakout, similar to those observed in April and May. In those two previous instances, following the breach of the 200-session moving average, initial gains amounted to approximately 17-18%. Source: xStation5