NG: Natural Gas Further Consolidation

NYMEX:NG1!   Natural Gas Futures
Natural Gas NG July futures bounced last week on warmer weather and production cuts. On Friday we saw a pullback, as weather forecasts lost some CDDs (cooling degree days). UNG fund started August contract roll on June 12 -17.

Technicals: Daily and 4 Hr chart are pointing toward lower prices; 1 Hr chart is forming a bottom. We may have a short-term bounce from lower levels, but overall direction is pointing toward lower prices, or consolidation.

Fundamentals: demand/supply balance remains bearish in the near-term; prolonged heat is required to produce a rally in prices, although the number of rigs has declined by 7. Second half of June was expected to be hotter per last week's forecast, but on Friday, weather pattern turned cooler, with lower demand for cooling. Until the next heat wave emerges, we may be facing lower prices.
Crude oil prices are declining due to high inventories build and worries about slow economic recovery, adding to the bearish picture.
On the positive note, economy is reopening in higher consumption states, NY, NJ, and PA on June 20th. Weekly EIA report capturing this period may show higher consumption two weeks from now. Until then, a strong prolonged heat wave is required to change current bearish price pattern.