The natural gas world has been seeing lots of red lately as prices last week plummeted to new multi-year lows, with the July contract twice testing the $2.30 level before finding some support. Since then we've quietly moved up a nickel, with the prompt month contract today closing two cents higher, just above the $2.35 level.
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It was a decent comeback for the July contract, which early this morning was actually down a few ticks. We had felt there was a little more upside risk, highlighting a "slightly bullish" sentiment in our morning report.
A lot of attention will be on this week's EIA report after two bearish numbers in a row, but that aside, we are seeing peak cooling in the weather pattern this week, with well below normal demand levels. While not headed back "hot" yet, we see the forecast GWDDs return to near normal levels beyond this week.
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So from a demand perspective, it's only up from what we are seeing this week. But can we take that next step and get above normal heat back into the pattern? The GEFS is hinting at it, getting the southern U.S. back above normal out in the medium range 12-16 day period.
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This is just one model's depiction, though the North American Ensemble Forecast System (NAEFS) hints at some warmer risk as well in parts of the South in its 8-14 day probability forecast.
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