NATGAS up 4% on Probable Demand
US natural gas prices trade over 4% higher today, bring a combined rebound off the Friday’s low to almost 8%. Improved sentiment towards natural gas prices can be reasoned with higher forecasted temperatures for key states which hint at increased demand for cooling. Over a third of power plants in the United States are gas-operated and it is also the most flexible source of energy at times of elevated demand.
Temperatures in the United States are expected to be above-than-average in near-term, what may increase demand for cooling, and electricity in turn. Source: NOAA
Another important factor to consider is supply. Wall Street Journal reports that producers continue to expand drilling as they hope that current low prices are impossible to hold for too long. Output is high but at the same time we can notice that the number of unfinished rigs is on the rise.This means that it would be easier and quicker for producers to boost output should prices jump. If increase in unfinished rigs continues, it would mean that producers are indeed expecting outlook to improve in the future and that production may drop in short-term to entice a price jump. On the other hand, stockpiles are not yet high enough for producers not to decide on keeping current output.
NATGAS is rebounding clearly but it should be noted that entire upward move was made during the Asian trading hours. The nearest resistance can be found in the $2.23 per MMBTu area and a key short-term resistance can be found in the $2.275 area. Source: xStation5