Natural Gas Fundamental Analysis – November 4, 2015 – Forecast

Analysis and Recommendations:

Natural Gas  added 15 points to trade at 2.271 recovering some of its losses from Monday due to winter temperature forecasts turning warmer. Nearly every year, despite a supply glut, natural gas prices find support during the winter months. This is because it is difficult for energy vendors to accurately predict Mother Nature, and therefore, the demand for natural gas for heating purposes. Accordingly, even if we don’t see a sharp rally in natural gas as we suspect is the most likely scenario, we should at least see a limited downside.

Utility companies will be inclined to build their stock piles ahead of the cold season while prices are cheap.

A cold winter and lower natural gas prices are driving natural gas prices. Natural gas prices could see resistance at $3 per MMBtu. Prices hit this mark in April 2015. In contrast, long-term oversupply and rising production will drag natural gas prices lower. Natural gas prices could see support at $2 per MMBtu. Prices hit this mark in October 2015.

The EIA (U.S. Energy Information Administration) estimates that US natural gas prices could average around $2.80 per MMBtu in 2015 and $3.10 per MMBtu in 2016. Goldman Sachs (GS) forecasts that gas prices could average around $2.70 per MMBtu in 4Q15. The gas price chart suggests that natural gas prices could fluctuate between $2 and $2.60 per MMBtu in the short term.

Natural Gas Weekly Weather Outlook

October 29th – November 4th: A mild and moist weather system tracking across the Mid-Atlantic and NE will exit today. However, a colder system out of southern Canada will sweep through the northern Plains and Midwest today, and across the NE Friday while weakening. This will bring another round of showers, with a rain/snow mix into the coldest air over the Great Lakes. Overnight lows behind the cold front will drop into the upper teens to 30s with highs of only 40s and 50s. There will also be weather systems tracking across the West the next few days with showers and cooling, with a track then through the mid-central US this weekend. This will be followed by a colder and stronger Western US system next week, while the central and eastern US becomes warmer than normal. Overall, demand will be MODERATE, then dropping back LOW by early next week.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

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Natural Gas Weekly Update
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