Natural Gas Price Fundamental Daily Forecast – Bullish Weather Forecasts Could Fuel Breakout Over $4.040

Natural gas traders are attempting to build on yesterday’s gains early Wednesday after the weather models introduced more heat into the forecasts and production declined unexpectedly. Meanwhile, higher spot gas prices provided some support although there were a few dips in the Midwest and part of the western United States. Natural Gas Intelligence’s Spot Gas National Average climbed 8.5 cents to $4.000.

At 08:01 GMT, September natural gas futures are trading $4.069, up $0.042 or +1.04%.

NatGasWeather Midday Forecasts Shift toward Hotter Temps

NGI said on Tuesday that with summer heat nearing what traditionally is the peak period this month, weather forecasts have once again become the driving force for gas markets. After a steady opening, prices rose at the mid-session as new forecasts came in progressively bullish.

NatGasWeather said in its midday report that its Global Forecast System (GFS) model trended even hotter for next week into the following week, gaining more than 5 CDDs. The forecast showed widespread heat building across most of the United States beginning late this weekend, aided by highs of lower to mid-90s over the East Coast and mid-90s to 102 over Texas and the South.

“This should increase power burns to 45 to 47-plus Bcf/d, an impressive amount, thereby resulting in a couple smaller-than-normal builds to finally push current deficit of 168 Bcf to near or over 200 Bcf,” NatGasWeather said.

Lower Production Estimates

Tennessee Gas Pipeline (TGP) on Monday posted a notice that repairs are planned at Station 315 Unit 2A near Wellsboro, PA, requiring the unit to be offline. TGP estimated the impact of the emergent repair to be up to 150 MMcf/d.

TGP also issued unrelated operational flow orders for zones 4-6, as well as some storage restrictions from the Bear Creek storage facility. Other maintenance events were planned later this month and into November.

Wood Mackenzie said Tuesday’s Lower 48 production estimate dropped around 1.3 Bcf/d day/day, with about 720 MMcf/d in Northeast Pennsylvania (NEPA) primarily along TGP.

Daily Forecast

Given the bullish weather data, we’re finally seeing some movement on the daily chart after several days of consolidation.

The minor range is $4.165 to $3.837. September natural gas futures are currently trading on the strong side of its retracement zone at $4.040 to $4.001.

Look for the bullish tone to continue to develop on a sustained move over $4.040. If this generates enough upside momentum then look for the market to possibly surge into the main top at $4.165. This is a potential trigger point for an acceleration to the upside.

A weaker tone could develop on a sustained move under $4.001. This could lead to a short-term pullback, but I don’t expect to see a change in trend.