Mixed fundamentals are pressuring natural gas futures for a second session after a forecast of hotter temperatures drove the market higher at the start of the week.
At -1000 EST, August Natural Gas futures are trading $2.966, up 0.027.
The price action in the nearby July futures contract and the next up August contract clearly shows that $3.000 is major resistance.
While most of the focus recently has been on the weather, traders can’t overlook output. Record high production levels so far this year
are one of the reasons prices have stayed below the $3 level, even with a 22% deficit in national gas stocks; the five-year average is $2.329/MMBtu.
Additionally, according to the Energy Information Administration, current working gas in underground storage sits at 1.817 Tcf for the week ended June 1.
Based on S&P Global Platts Analytics estimates, U.S. production fell 1.4 Bcf on the day to 76.8 Bcf Tuesday, largely due to production declines in the Rockies
and the Northeast. What could lead to further price pressure, or at least cap gains is expectations of a rise in production to 77.9 Bcf/d over the next seven days.