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Sizzling Weather Forecast Gives Natural Gas Prices A Big Boost

Tuesday, June 30, 2020 at 12:47PM

Don’t call it a comeback? Okay, so prices remain at super low levels as far as a historical basis is concerned, but we have seen quite the rally in the natural gas market since it was left for dead late last week following the big bearish EIA report. A large part of the rally is likely the result of weather forecasts shifting toward very strong heat during the first half of July, indicative of much higher natural gas demand. Note the coverage of widespread above normal temperatures in our morning outlook.

Note the coverage of widespread above normal temperatures in our morning outlook.

Reducing this down to Gas-Weighted Degree Days (GWDDs), we see just how far above normal projected demand sits, and even well above the levels of the same time last year.

Morning GWDD Forecasts

In fact, the forecast is at such a hot level currently that even assuming just normal from day 15 through the balance of July would give us the third hottest July on record, behind only 2011 and 2012.

July GWDD forecasts + normal

This comes on the heels of a June that has been hotter than normal as well.

mean temp june 1 -28 2020

While extreme, we do not categorize this pattern as a surprise. We have been highlighting the risk of a high-end hot summer for a couple of months now in our longer-range updates.

Bespoke Weather Services La Nina may 4 2020

The result of the hotter move has been a nearly 20-cent rally in prompt month natural gas prices, getting us squarely back in the middle of the long-running prompt month trading range that was briefly broken to the downside last week.

prompt month natural gas

Now, as we know, in summer, weather does not rule the natural gas market as it often does in winter, and there are still bearish factors that need to be overcome, as evidenced by last week’s EIA report, and the fact that demand cannot climb back to pre-COVID levels, but, for now, we have, at the least, stopped the bleeding.

Good news! We not only cover the weather angle, but also offer fundamentals data and analysis to give you a unique and unmatched blend of information, keeping you better informed, and able to anticipate market moves before they occur. If you like what you see here, we invite you to sign up for a 10-day FREE trial here to give all of our products a test run.

Originally Posted on June 30, 2020 – Sizzling Weather Forecast Gives Natural Gas Prices A Big Boost

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