The August natural gas contract fell another almost percent and a half today as cooler risks later in July combined with elevated production levels to pressure prices lower.
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We first saw risks for these cooler trends for late in July back at the end of May, when we warned clients that any rally in prices into July would likely fail and reverse.
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More recently, our Morning Update highlighted cooler trends that began becoming more apparent overnight last night, with slight GWDD losses in the medium and longer-range.
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This had our sentiment being slightly bearish on the day, as we warned subscribers that prices could initially bounce early this morning on any lingering cash firmness (like they did) before reversing back lower.
As seen in our Afternoon Update today, the Climate Prediction Center has clearly picked up on some of these longer-term cool trends too, especially in the 8-14 Day time period.
These are cool risks that we have been tracking now for over a month, but they have become even higher confidence more recently. For example, our Note of the Day last Friday explained how weather would eventually break natural gas prices lower this week.
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Moving forward, now, the natural gas market has to contend with how legitimate these cooler trends will be and what kind of staying power they may have. Already we have seen elevated production depress the H/J March/April 2019 spread as noted yesterday, and this trend only continued again today (aided by the fact that we would burn less gas with less impressive heat later in July as well, allowing for larger injections into storage).
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