Natural Gas News & Notes

The August 2021 NYMEX natural gas future's contract exploded higher this week, breaking out of the consolidated trading range that it had been in since the start of the month. The Aug21 contract gained 38.6 cents on the week to settle at $4.06. The swift upwards move in prices was aided by updated near-term weather outlooks calling for extreme heat to be seen in most major consuming regions of the US over the next few weeks.

In addition to the fundamentally supportive weather outlooks, technical traders also aided in driving the contract higher. The Aug21 contract becomes the first prompt month contract to break the psychological $4.00 level, a level last seen 31 months ago in late 2018. Early cold weather in November 2018 rallied prices from the low $3.00 level to almost $5.00 in a span of 6 weeks before the rally finally fizzled out. Resistance for the Aug21 contract is now seen at $4.23, $4.50 and then at $4.80. Support is seen at $3.81, $3.60 and the at $3.45. These levels will also apply to the Sep21 contract when it assumes front month status on 7/29. With expiration looming for the Aug21 contract on 7/28, trading could be wild to start the week.

The bullish momentum for natural gas prices continues to increase. With the combination of hot weather and strong exports leading demand higher and with flat gas production keeping supply in check, it's hard not to see prices continue to rally for the next few weeks. Trading is likely to be very choppy. End-users with near-term price exposure should be monitoring the market carefully to buy dips when the opportunity arises.