Natural Gas Seasonality

In this post, I’m trying to work through a process of understanding in regards to the seasonality of Natural Gas leading into the month of July.

Here are the facts I’ve collected from more established market participants on the matter:

Thursday’s inventory report showed an increase of 96 bcf versus the average estimate calling for a 90 bcf increase and a five year average injection of 91 bcf.

Total inventories as of June 8th are at 1,913 bcf, 21% below the five year average and 29% below year ago levels.

Over the last four weeks, natural gas storage has increased 375 bcf. Even with the slightly higher injection, the market is cautious ahead of the weekend, as hot weather is expected to move into the Plains, Midwest and East Coast for the next five days.

Temperatures in Chicago could reach 96 degrees on Sunday. Cooling demand will be on the rise over the next week, with natural gas output already up 2.96 bcf per day, up 4.1% from a year ago and a record for this time of year.

Weather and seasonality always plays a role in the price of Natural Gas. The weather that is expected and is hot in the southern and northern regions of the country adding to the slight Bid up in price on Friday. As July Nat Gas finished up 0.06 @ 3.03.

When it comes to the seasonality, the bid incoming to end, as Nat Gas typically peaks during the third or fourth week in June. Then followed by a precipitous decline in toward the middle part of summer into the fall simply because of the amount of stockpiles in inventory.

However, this year we are 507 billion cubic feet below the five-year average and 785 billion cubic feet below the inventory this time last year. This could keep a slight floor under Nat Gas and a close eye will be heeded Ronan extension of price through the 3.00 mark. Expectations of an 8-10 cent move above 3.00.

Source:

EIA.GOV

@chigrl on Twitter

CME Group

BarChart

CFTC

-R.W.N II

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