US Weather: Bullish or Bearish for Natural Gas Futures?
Natural gas prices
August US natural gas (GASL) (UGAZ) futures contracts were trading flat at $2.96 per MMBtu (million British thermal units) in electronic trading at 1:55 AM EST on July 14, 2017. Prices are near a four-month low. The United States Natural Gas ETF (UNG) is also near a four-month low. It fell 1.0% to 6.63 on July 13, 2017.
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The latest weather forecasting model suggests that the weather could be mild in the northeastern parts of the US next week. There will likely be rain in the Great Lakes region over the weekend. There will be warmer-than-normal temperatures in most parts of the US for the next two weeks. Warmer weather would drive the demand for air conditioners, which would increase the demand for natural gas.
More than half of US households use natural gas for heating and cooling purposes. As a result, it would support natural gas (UGAZ) (DGAZ) prices. Some traders think that hot weather could drive natural gas demand this year. Natural gas demand is usually high during this time of the year. Changes in the weather also influence US natural gas inventories.
In the next part, we’ll analyze US natural gas inventories last week.