SMC NatGas Weekly Summary

Summary for Week Beginning July 18, 2021


Current Situation

In our last report, dated July 11, we noted that the NYMEX natural gas futures market was resting about three cents lower than the previous week, at $3.674. This was after a week where the market opened close to where it left off, at $3.704. It then rose to the high of the week on Monday evening at $3.822 before engaging in a 30 cent, downward market reversal to $3.52. Seasonally, we considered that the downward reversal movement from $3.822 to $3.52 served to conclude the April-June pre-summer seasonal recovery movement and initiate the first summer seasonal decline phase of the new July-September summer season. Notably, though, with our thoughts that this year’s first summer decline would be brief, we were already questioning whether the 30 cent move from $3.822 to $3.52 constituted the entirety of this first decline.

As to how the latest week turned out, with no weather changes or other news to break the market one way or the other, the market opened the week about where it left off at $3.673 and consolidated between $3.623 and $3.769 before Thursday’s EIA storage report. The report showed a surprisingly bearish 55 Bcf injection as it exceeded expectations by eight Bcfs.  As such, the market reacted by drifting to a new low of the week at $3.584 on Friday morning. However, it couldn’t match the previous week’s low of $3.52. Due to doubt as to whether the current and rather benign temperature pattern can continue all the way through August, the market recovered to close right where it left off the previous week at $3.674.  seasonally, we consider that the first decline phase of the summer season remains operational with movement playing out much as anticipated; the decline is looking more like consolidation than a definite pullback.

To summarize last week’s market activity, the prompt month natural gas futures contract opened the week about where it left off at $3.673 and rose to the high of the week, $3.769, on Monday evening.  It then fell to the low of the week on Friday morning at $3.584 and recovered somewhat to close the week exactly where the previous week did at $3.674.

Factors Affecting the Market – Summary

  • Supportive: storage; supply/demand balance; oil
  • Neutral: cash; weather; tech considerations
  • Negative: seasonal forces


As to how our summer seasonal movement is turning out at this early stage, the market is playing out within expectations thus far as it went into a downward reversal on July 6 right after setting an apparent $3.822 final high of our pre-summer season.  With this downward reversal, we consider that our first summer decline became operational and has been to a low so far of $3.52 on July 7.

As to our more specific thoughts on the ongoing first summer decline, with our thoughts last week that this first decline would last all that long (into mid-July), we were already evaluating as to whether the 30-cent decline to $3.52 constituted the entirety of the move.  While we looked for the market to at least attempt to better the $3.52 low point, we noted the tightness in the supply/demand and said that what is normally a pretty good first summer decline in most years may only end up being 1-2 weeks of consolidation this year.  We reiterated our thoughts that the $3.30s are probably the best this first decline can do before a midsummer rally gets underway.

As to how our first decline is playing out, last week’s movement was within expectations with the market trying to match the $3.52 low two times but ultimately simply consolidating above $3.52 between $3.584 and $3.769.  With the market closing the week exactly where it did the week before at $3.674, there was nothing substantial to glean as to whether the first decline has run its course or not.  There is still another week in what we consider the normal mid-July window when such a first decline typically bottoms.

As to the coming week, the NYMEX natural gas futures market is currently resting exactly where it was the previous week at $3.674 after a week where the market opened about where it left off at $3.673 and rose to the high of the week on Monday evening at $3.769 before heading down to $3.584 on Friday morning and recovering to close the week unchanged from the week before.  With the next storage report again not anticipated to be all that bullish, we look for the market to have a decent chance of challenging the $3.52 low point again.  We do look to temperature forecasts to be key in how this plays out.  As to all factors affecting natural gas futures, please see the summary box above.


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