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Natural Gas Price Fundamental Daily Forecast – Pressured by Cooler Forecasts, Underpinned by Firm Spot Prices

Driving the two-side price action is a forecast calling for heat and high humidity until mid-week then a cooling off period into August 30. The odds are in favor of a downside bias because of cooler-trending long-range outlooks and rising production, however, the bulls are being stubborn after picking up support from higher spot prices.
James Hyerczyk
Natural Gas

Natural gas is putting in a mixed performance early Tuesday shortly before the regular session opening. The market is currently trading lower after giving up earlier gains, however, the range is too small to determine if the buyers or sellers have the upper hand today.

Technical factors also continue to play a role in the price action with the market locked inside a pair of retracement zones at $2.191 to $2.226 and $2.159 to $2.132. Something has to give sooner or later. If an upside bias develops then $2.278 to $2.332 will become the primary target. If a downside bias forms then look for a possible retest of the contract low at $2.045.

At 11:37 GMT, October Natural Gas is trading $2.195, down $0.018 or -0.81%.

Driving the two-side price action is a forecast calling for heat and high humidity until mid-week then a cooling off period into August 30. The odds are in favor of a downside bias because of cooler-trending long-range outlooks and rising production, however, the bulls are being stubborn after picking up support from higher spot prices.

Daily October Natural Gas

Short-Term Weather Outlook

According to NatGasWeather for August 20 to August 26, “Strong high pressure will dominate the western and southern U.S. with highs of 90s to 100s, hottest from California to Texas for strong demand. High pressure will briefly extend across the Midwest and East today with highs warming into the upper 80s to near 90 degrees Fahrenheit from Chicago to New York City, then cooling Thursday through the weekend as a weather systems arrives with showers and highs of 70s and 80s. Overall, national demand will be high through mid-week then easing to moderate.”

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Daily Forecast

The daily forecast remains the same as yesterday’s because the market is still trading in a range.

The main trend is down according to the daily swing chart. A trade through $2.045 will signal a resumption of the downtrend. The main trend will change to up on a trade through $2.338.

The new minor top is $2.273. A trade through this level will change the minor trend to up. This will also shift momentum to the upside.

The market is also bouncing around a pair of technical retracement zones at $2.191 to $2.226 and $2.159 to $2.132. Trading between these retracement zones may be an indication that traders have priced in the two-sided weather forecast.

Look for a potential upside bias to begin on a sustained move over $2.226 and for the downside bias to resume on a sustained move under $2.132.

Recent data from the Commodity Futures Trading Commission (CFTC) showed that money managers boosted their net short positions to more than 200,000 contracts, the most bearish data since 2015. So if there is a rally then it will likely be fueled by short-covering, which means it won’t last although it has the potential to look spectacular on the daily chart. If short-sellers decide they want to punish the speculative buyers then they’ll keep increasing their positions until they run out of foolish bottom-pickers.

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