Natural Gas Price Fundamental Daily Forecast – Buyers Could Step in on Test of $3.151 to $3.111

Long natural gas investors continued to pare positions for a second day on Tuesday as investors reacted to expectations of less heating demand over the near-term.

January Natural Gas futures settled at $3.203, down $0.059 or -1.81%.

After posting a 10.83% gain last week, natural gas has been under pressure since the opening on Monday after new weather forecasts called for the return of average to above-average temperatures across key U.S. demand areas.

According to natgasweather.com, for the period November 14 to November 20, “The central and southern U.S. will be mild to warm with highs reaching the comfortable upper 60’s to 80’s.”

“The northern and eastern U.S. will see milder temperatures for a few days before weather systems return Friday through the weekend with lows again dropping below freezing across the Midwest and Northeast for another surge in demand back to high from moderate.”

Natgasweather.com also added late Tuesday, “A fresh weather system and cold shot will arrive over the Great Lakes and East this coming weekend for a surge in demand back to strong levels after easing this week. This storm won’t be as cold as this past weekend’s, but will have a bit more moisture for showers and thunderstorms in the warm sector, and snow showers behind the cold front. The western and central U.S., including Texas will be rather mild to warm with high pressure overhead.”

Forecast

The current weather forecast suggests a down then up pattern on the charts. This fits in nicely with our expectation of a break into $3.151 to $3.111.

Since the main trend is up, we’re looking for the return of buyers on a test of this zone. Trader reaction to a test of this zone will set the near-term tone. Buyers are going to try to build a secondary higher bottom. Sellers are going to try to drive the market through this zone in an effort to make $3.321 major resistance.

Buyers will likely be looking for help from this week’s U.S. Energy Information Administration’s storage report.

The EIA report is expected to show a draw of between 3 to 15 billion cubic feet (bcf) for an average of 9 in the week-ended November 10.

That compares with a gain of 15 bcf in the preceding week, a build of 30 bcf a year earlier and a five-year average rise of 12 bcf.

Watch the price action and order flow on a test of $3.151 to $3.111. Trader reaction to this zone will tell us if the buyers have returned, or if the selling pressure is increasing.