Natural Gas Price Fundamental Daily Forecast – Bearish Long-Range Weather Forecasts Weighing on Prices

Natural gas futures are drifting lower shortly before the regular session opening. Prices continue to weaken in response to expectations of lower demand due to bearish long-range weather forecasts.

The daily chart pattern suggests the market is in a position to make a new contract low today with price hovering near last week’s low at $2.167. The market would have to take out $2.351 to change the main trend to up, but in order to get to this level, the news is going to have to be convincingly bullish enough to shake the strong short-sellers out of the market.

At 12:26 GMT, February natural gas is trading $2.180, down 0.006 or -0.27%.

Short-Term Weather Outlook

Natural Gas Intelligence says, “At issue is the absence of lasting cold weather to support prices. Last week, weather models hinted at a blast of chilly air moving in the Midwest and Northeast by the middle of next week, but the intensity of that cold front is now seen leading to only a modest bump in demand.”

Bespoke Weather Services added, “Furthermore, the Global Forecast System (GFS) and European weather models show a significant warmer shift taking place immediately afterward as the next upper level trough dumps into the western half of the nation, amplifying a warmer ridge again farther east.”

“We still see no change in the higher latitude pattern that suggests a material colder shift can occur anytime soon for key natural gas consuming regions,” Bespoke chief meteorologist Brian Lovern said. “We can get an occasional colder day, but the base state of the pattern favors warmer overall, outside of the western states. This sets us up for a warmer January than we saw last winter rather easily, barring a change in the second half of the month.”

NatGasWeather said, “Essentially, the coming pattern has trended further bearish with only one to two days of the next 16 with HDDs above normal, and barely so. Simply, not cold enough.”

Daily Forecast

Look for an upside bias or short-covering rally to develop on a sustained move over $2.206 and the downside bias to continue on a sustained move under $2.166. The size of the moves will be determined by the volume, which should come in well below average because of Wednesday’s New Year’s Day holiday.