Natural Gas Price Fundamental Daily Forecast – ‘Battle of the Seasons’ Begins; Weakens Under $2.368, Strengthens Over $2.440

Natural gas futures are trading lower on Friday after a bearish government storage report drove prices sharply lower the previous session. The market is now testing a major 50% to 61.8% retracement zone, which should determine its next short-term move.

Additionally, the change from summer to fall also claimed a fuel casualties after a steep plunge in spot prices. According to Natural Gas Intelligence, “widespread discounts sent NGI’s Spot Gas National Average tumbling 12.5 cents to $1.985/MMBtu.”

At 11:55 GMT, November natural gas futures are trading $2.421, down $0.022 or -0.94%.

U.S. Energy Information Administration Weekly Storage Report

On Thursday, the U.S. Energy Information Administration (EIA) reported a larger-than-expected weekly injection into U.S. natural gas stocks, topping even the highest estimates.

The EIA reported that domestic supplies of natural gas rose by 102 billion cubic feet for the week ended September 20.

Traders were looking for the EIA report to show an injection in the upper 80s or low 90s Bcf for the week-ending September 20.

Bloomberg analysts were looking for a median 92 Bcf, with estimates from 79 Bcf to 100 Bcf. The Wall Street Journal predicted an average 89 Bcf, with a range of 83 Bcf to 96 Bcf. Reuters analysts forecast 89 Bcf, with responses from 79 Bcf up to 96 Bcf.

Intercontinental Exchange EIA Financial Weekly Index futures settled Tuesday at 92 Bcf. NGI’s model predicted a 90 Bcf injection.

A year ago the EIA reported a 51 Bcf build. The five-year average is a 74 Bcf injection.

Total stocks now stand at 3.205 trillion cubic feet, up 444 billion cubic feet from a year ago, but 47 billion below the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for September 27 to October 3, “High pressure will strengthen to unseasonably strong levels across the southern and eastern halves of the country this weekend through next week with very warm to hot conditions as highs reach the 80s to 90s. It will be hottest across from Texas to the Southeast for relatively strong late season demand. At the same time an early season cold shot will advance into the West with valley rain and mountain snow with lows dropping into the chilly 20s to 40s for modest early season heating demand. Essentially, stronger demand the next seven days with a better mix of heating and cooling needs.”

Daily Forecast

Get ready for the return of volatility due to the weather. The National Weather Service (NWS) highlighted a “battle of the seasons” in its short-range forecast Thursday, predicting “huge temperature contrasts across the nation” for Friday and into the weekend.

“Much below-average temperatures” were expected to develop “from the Pacific Northwest, Great Basin, California, into the Northern Rockies and Northern High Plains, while much above-average temperatures dominate from the Central to Southern Plains into the East.”

On the daily chart, the main range is $2.185 to $2.745. Its 50% to 61.8% retracement zone is $2.440 to $2.368. This zone is currently being tested. Trader reaction to this area will determine the next short-term move.

A sustained move over $2.440 will signal the return of buyers, while a move under $2.368 will indicate the selling pressure is getting stronger.