For Natural Gas Bulls, The Wait Isn't Long Now
By mid-June, demand growth y-o-y will start to outpace supplies. Bulls need to wait just a little longer.
Following last week's surge in natural gas prices, June Henry Hub contracts are giving it mostly back to start this week following a series of disappointing weather model updates.
Source: HFIRweather.com
The latest ECMWF-EPS model is showing demand to just be slightly above the seasonal norm. Given that power burn demand is now the driving force for prices going forward, neutral to bearish weather will put immense pressure on prices, while mildly bullish will simply keep prices flat due to the surplus we are still seeing in the market today.
Looking at the latest power burn reading, it is obvious to us that if mother nature cooperates, we will see an all-time high in power burn this summer. The market understands this, so when bullish weather arrives (warmer than normal weather), you can see prices get a nice uplift.