Natural Gas Futures Market News and Commentary
July Nymex natural gas (NGN19) on Monday closed up by +0.117 (+5.35%). Nat-gas prices rallied sharply Monday after forecasts for sweltering heat in the U.S. spurred short-covering in nat-gas futures. Funds hold a large net-short position in nat-gas that could fuel a short-covering rally. Last Friday's CFTC data showed that funds boosted their net-short positions by 32,020 contracts in the week ended June 18 to a 3-year high of 88,038 contracts. The Weather Company on Monday forecast above-average temperatures across the contiguous U.S. during June 29-July 3 with the northern Great Plains and upper Midwest having the hottest weather of the season, which should boost nat-gas demand for air conditioning. Jul nat-gas last Thursday plunged to a new 3-year nearest-futures low on the larger-than-expected build in weekly EIA nat-gas inventories of +115 bcf, higher than expectations of 105 bcf and above the 5-year average of 84 bcf. That marked the 12th consecutive week that U.S. nat gas inventories rose by more than their 5-year average. Strong U.S. nat-gas output remains bearish for nat-gas prices as Monday's data showed that U.S. lower 48-state nat-gas production is up +7.7% y/y at 85.952 bcf. Last Thursday's EIA data showed that U.S. nat-gas supplies stood at a 4-3/4 month high of 2.203 bcf as of June 14, up +9.7% y/y but -8.3% below the 5-year average.