NatGasWeather.com, though, anticipates demand to remain low in the next 15 days due to mild weather conditions that diminish the need for indoor heating or cooling.
On the supply side, observers anticipate output to dip from near-record levels as the low prices force producers to shut down rigs and slow their work. The supply outlook is already diminishing as the number of working rigs has recently dropped to historic lows – Ritterbusch and others, though, have warned that the lower rig counts have yet to translate to lower production.
Still, investors should be careful with natural gas in the near-term following the group’s recent rally.
“In fact, the impressive price rally itself tends to decrease the chances of further gains. Higher natural gas prices have a way of eating into demand – as natural gas prices rise, utilities can lean harder on their coal-fired power plants, paring back gas generation. That could cut into demand for gas, putting a cap on the latest price rally,” according to OilPrice.com.
For more information on the natgas market, visit our natural gas category.
United States Natural Gas Fund
