Natural gas futures are kick off the trading week lower as weather models shift cooler in the final few days of May. With the summer season on the horizon, can the early forecasts of oppressive heat ring true? Or will temperatures be lower than what many had initially anticipated? For now, natural gas markets are not as bullish on summer heating patterns as they were earlier this month.
June natural gas futures fell $0.016, or 0.54%, to $2.961 per million British thermal units (btu) at 19:46 GMT on Monday on the New York Mercantile Exchange. Natural gas had slumped below $2.85 in the early part of the trading session before paring its losses. The energy commodity is coming off a weekly loss of 5%, although it is still up 17% year-to-date.
Investors are taking some profits to finish the month of may as some might have turned bearish on the weather models. It had been widely expected that the US would face one of its hottest summers on record for weeks. But some new data suggest it may not be as hot as previously predicted.
According to Bespoke Weather Services (BWS), weekend weather models have “abruptly shifted much cooler” in the eastern half of the United States. Some models suggest temperatures could be below normal going into June, with most of the higher temperatures occurring in the western US.
Overall, the paucity of cooling demand could result in a triple-digit injection in the weekly US Energy Information Administration (EIA) storage reports for the next two to three weeks. The median estimate for Thursday’s EIA report is a build of 107 billion cubic feet.
That said, Bespoke is not convinced that natural gas prices will trend below the $2.80 mark. But with only a few days left of the June contract, market analysts are penciling in a drop of several more cents.
In other energy commodities, June West Texas Intermediate (WTI) crude oil futures rallied $2.38, or 3.74%, to $65.96 per barrel. July Brent crude futures were unchanged at $68.38 a barrel. June gasoline futures soared $0.0515, or 2.49%, to $2.1224 per gallon. June heating oil futures spiked $0.0558, or 2.81%, to $2.0434 a gallon.