Demand Boost Helps Strengthen Natural Gas Prices, Traders Increase Long Positions

Natural gas prices consolidated just below the $3.00 per Mbtu level in late US trading on Friday with net gains on Monday as elevated temperatures continued to boost demand.

The latest NYMEX data recorded an increase in the long, non-commercial positions in the latest week with net longs above 92,500 from just below 81,000 the previous week. This was the second successive weekly increase and highest positioning for four weeks, although still substantially below May highs near 250,000.

The dollar remained on the defensive during Monday with the US currency index held below the 95.0 level. Underlying US vulnerability continued to provide net support for energy prices during the day.

Crude oil prices were unable to sustain their best levels, although prices held a solid tone which also provided some net support to the energy complex.

Prices moved higher during the European session with a break back above the $3.00 level and a peak close to $3.05 early in US trading.

The US currency did regain some support in late European trading and oil prices dipped lower which curbed natural gas support to some extent. Nevertheless, prices were able to hold above the $3.00 per mBtu level in late European trading.

The latest weather forecasts suggest that very hot conditions will prevail across most of the country during the week ahead even if there is some slight relief from very high temperatures during next weekend.

The heat conditions overall should maintain strong demand for gas which will help underpin prices over the next few days.

Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.