Since Friday's natural gas rally, prices have been stuck moving back and forth to start this week, thanks to opposing forces battling it out for market supremacy. The August contract closed a couple of cents higher today, after a slight down day yesterday.
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In one corner, we have the weather pattern, which has shifted quite strongly to the hotter side over the last week or so, with widespread heat dominating the Midwest to East over the next couple of weeks.
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As the chart on the bottom right shows, the increase in heat is enough to push the total July demand level to 3rd highest of all July months on record, behind only 2011 and 2012, now ranking even hotter than last July.
As bullish as that is, we are reminded that this is not winter, where weather alone can use natural gas as its own punching bag. This time of year requires at least some cooperation from the fundamentals side, and so far this week, the two sides are not being friendly to one another.
We've seen production make new all-time highs over the last several days, continuing its general up-trend.
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Canadian imports also were back fully online last week, for the EIA report that will be released this Thursday.
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The added supply aided in a pretty sizable build reported from DTI+TCO yesterday, indicating that this week's EIA number may reflect that supply/demand balances have turned back to the loose/weak side.
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