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Natural Gas Price Fundamental Daily Forecast – 8-14 Day Forecasts Suggest Reducing Long Positions is Good Idea

By:
James Hyerczyk
Published: Nov 14, 2018, 08:41 UTC

Traders are now starting to focus on the late November/early December weather patterns. Current forecasts are calling for warmer temperatures during the last week of November, but the models are still uncertain about the first week in December.

Natural Gas

Natural gas futures hit a new high for the week early in the session before turning slightly lower. Today’s rally to $4.164 represented the highest price level since December 2014. Traders are watching the price action very carefully because the $4.000 level has proved to be important resistance in the recent past. Some analysts are calling for a $4.200 top on this particular swing up.

At 0816 GMT, January Natural Gas is trading $4.123, down $0.024 or -0.58%.

Historically, the Nearby futures contract reached a high of $4.007 on December 1, 2014 then promptly declined to $1.639 on March 3, 2016. We’re not calling for a repeat of the pattern, but it is something to consider. It all depends on how the winter heating season pans out.

Bullish traders have been relying on a weather pattern that is expected to bring cold temperatures across the country until November 22 to 25. After that, temperatures are expected to return to more average levels for this time of year.

While bullish traders have been citing the large storage deficit as the reason for higher prices, bearish traders have been leaning on large production numbers, however, this production hasn’t been showing up in storage.

According to Platts Analytics, total U.S. demand is expected to top out Wednesday at 109.4 Bcf, then slide over the next seven days to 101 Bcf/d before dropping to 92.5 Bcf/d eight to 14 days out. If this forecast pans out then we should be looking for a top this week until the next major cold pressure dome forms.

Forecast

Traders are now starting to focus on the late November/early December weather patterns. Current forecasts are calling for warmer temperatures during the last week of November, but the models are still uncertain about the first week in December. Late Tuesday, 54% of European weather services are calling for a continued warm pattern, which may be enough to bring an end to the current rally.

The 46% calling for a return of colder weather during the first week of December, expect prices to hold above the psychological $4.00 price level.

Given the current weather forecast for the next 14 to 21 days, it’s probably a good idea to start reducing long positions at this time.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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