Monday, July 29, 2019 at 4:49PM
Today was the final day of existence for the August natural gas contract, with September taking over as prompt month starting tomorrow. The story today, however, was the setting of new multi-year lows. The August contract rolled off the board down 2.8 cents on the day, settling just over the $2.14 level. Part of the reason for the decline was the continued trend toward cooler medium range weather forecasts over the weekend, a risk that clients were alerted to in Friday afternoon's "Pre-Close" Update. The area of below normal temperatures forecast in the 11-15 day period was more expansive this morning thanks to a large upper level trough projected to move through the eastern half of the nation. This translates into a period of weaker demand for natural gas, as measured by our "Gas-Weighted Degree Days" (GWDDs). The astute reader may notice that demand appears to be rebounding back higher at the end of the forecast period, indicating the chance that this cooler period, much like last week's, will be rather brief with temperatures rebounding quickly in its wake. But with normal temperatures starting to decline from their summer peak, would it be enough to help support natural gas prices even if that is the case? Also complicating matters is the reality that weather is just part of the equation when it comes to price impact. That is where our research comes in, which is geared toward combining both weather and fundamentals in order to hone in on what the next market move will be. Sign up for a 10-day free trial here and give our products a closer look.