Natural Gas Price Fundamental Daily Forecast – Bullish Over $2.982, Bearish Under $2.964

Natural gas prices plunged on Monday in sympathy with a steep sell-off in WTI crude oil. However, value seekers bought the weakness, driving the market higher into the close. The price action strongly suggests that buyers have established value and support at $2.886 to $2.880. Additionally, the price action also suggests that natural gas may be working on another set of fundamentals than crude oil in regards to the hurricane damage.

October Natural Gas futures settled at $2.961, up $0.037 or 1.27% after reaching an intraday low at $2.880.

Forecast

Keep in mind that the crude oil market is reacting to demand concerns, but natural gas traders are reacting to production concerns. The threat of lower production is bullish and it offsets any effects from forecasts of lower cooling demand.

Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly storage report, analysts are predicting utilities injected 38 billion cubic feet of gas into storage during the week-ended August 25. That compares with an addition of 46 bcf a year earlier and a five-year average injection of 67 bcf for the period.

If the forecast is spot-on then total stocks would rise to 3.163 trillion cubic feet. With this number, inventories would come in at about 7 percent below a year earlier and less than 1 percent above the five-year average.

According to the latest weather model for the country, below normal temperatures are expected for the next two weeks.

In other news, the Commodity Futures Trading Commission reported that U.S. natural gas speculators cut their net long positions in the week to August 22. The number of rigs drilling for natural gas in the United States fell by two last week to 180, data from oil services company Baker Hughes showed on Friday.

Prices could continue to be underpinned by production concerns. This could offset any concerns over low demand due to below normal temperatures.