It is a new week, but no new trend for natural gas prices, as the June contract settled another 4 cents lower on the day today, marking its lowest value since June became the prompt month.
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The main culprit was once again a lot of weakness in the cash market, with spot prices disappointing the market and inciting another round of selling throughout the curve, most pronounced at the front of the curve, as to be expected when cash is very weak.
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While supply/demand balances have shown some improvement over the last week or so, one issue the market is facing is quite simply, a lack of demand. Our morning forecast shows that, after a handful of days later this week, demand returns to lackluster levels heading into the middle of the month, with cooler changes lowering the risk of early-season heat.
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These cooler changes are tied into progression of a high amplitude wave in the Madden-Julian Oscillation (MJO), which we alerted subscribers to last week regarding its potential cooler influence.
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Over the weekend, models remained quite steadfast in moving the MJO over toward phases 8 and then 1.
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And sure enough, the pattern looks solidly cooler around the middle of the month, as seen in the latest GEFS 6-10 day forecast.
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