Baxia Markets
May 25, 2021

Will A Heat Wave Drop Natural Gas Prices?

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Natural gas futures slipped lower on May 24th, likely because the market participants rolled over their short positions. On the Multi-Commodity Exchange (MCX), the gas price had gained 0.56% last week. However, the widespread heat combined with the latest EIA stat sent the gas price down this week, and the trend is likely to continue for the foreseeable future.


Natural Gas prices fluctuate constantly, depending on market influences such as supply and demand, alternative resources and even weather. The natural gas price moved lower last Friday and closed below resistance near the 10-day moving average. 


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According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than usual for most of the East Coast and Mid-Atlantic for the coming weeks. Warmer than normal weather will decrease the heating natural gas consumption. According to the EIA, Total U.S. natural gas demand fell by about 11% compared with the previous week, residential and commercial consumption declined by nearly 40% as comfortable temperatures lowered heating demand across the nation. With less demand, can we anticipate a drop in price?


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