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Natural Gas Price Fundamental Daily Forecast – Bearish EIA Report Could Fuel Break into $2.297 to $2.256

Thursday’s price action after the release of the EIA report indicates that investors are respecting the July 10 top at $2.510. Technically, if a closing price reversal top forms (i.e. higher-high, lower-close) then we could see the start of at least a 2 to 3 day correction. The next major move in the market will likely be determined by how investors react to $2.297 to $2.256.
James Hyerczyk
Natural Gas

Natural gas futures are trading lower on Thursday after the release of a bearish government storage report. The selling follows two days of tremendous gains fueled by aggressive short-covering related to the expiration of the September futures contract last week, seasonal buying and relief that Hurricane Dorian didn’t lead to a huge drop in demand as originally forecast last week.

At 14:51 GMT, October natural gas futures are trading $2.398, down $0.047 or -1.88%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 84 billion cubic feet for the week-ended August 30. Traders were looking for a 75 Bcf build.

Total stocks now stand at 2.941 trillion cubic feet, up 383 billion cubic feet from a year ago, but 82 billion below the five-year average, the government said.

Daily October Natural Gas
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Short-Term Weather Outlook

According to NatGasWeather for September 5 to September 11, “Comfortable conditions continue across the Midwest, Northeast, and Mid-Atlantic with highs of upper 60s to 80s for light demand. The West, Texas and South will be hot with highs of 90s and 100s as high pressure rules for strong regional demand.”

“Hurricane Dorian will bring rain and wind to the Carolinas’ the next few days. The West will cool this weekend into next week, while the rest of the country warmer than normal. Overall, demand will be high across the southern U.S. and moderate to low across the northern U.S.”

Daily Forecast

Thursday’s price action after the release of the EIA report indicates that investors are respecting the July 10 top at $2.510. Technically, if a closing price reversal top forms (i.e. higher-high, lower-close) then we could see the start of at least a 2 to 3 day correction.

The main range is $2.510 to $2.045. Its retracement zone at $2.332 to $2.278 is a downside target. It is controlling the near-term direction of the market. If the bull have taken control then look for support to form inside this zone.

The minor range is $2.126 to $2.468. Its 50% to 61.8% retracement zone at $2.297 to $2.256 is additional support.

For days, I’ve been saying the market was due for a short-covering rally because of the massive amount of shorts sellers in the market after the September futures contract expired last week. Those shorts had to decide whether to continue to press the market lower into September, or cover aggressively.

The weak short covered, producing the huge rally. This allowed the stronger short-sellers to re-enter at more favorable prices.

Seasonal buying also contributed to the recent rally as well as the news that Hurricane Dorian did not fuel a drop in demand.

The next major move in the market will likely be determined by how investors react to $2.297 to $2.256.

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