Natural Gas Price Fundamental Daily Forecast – Could Move Lower Until Weakest Long is Shaken Out

Natural gas futures started out where they left off last week on Monday with sellers dominating the trade as long-term weather forecasts released over the weekend pointed toward even milder temperatures throughout December. Natural Gas Intelligence (NGI) said so far December is on track to come in within the Top 10 warmest on record.

Spot gas prices also retreated as traders found no urgency to load up ahead of mostly comfortable temperatures throughout most of the United States. NGI’s Spot Gas National Average fell 12.5 cents to $2.405.

On Monday, January natural gas settled at $2.426, down $0.149 or -5.79%.

Bespoke Weather Services Outlook

NGI reported after the close on Monday, After dropping hints last week that the atmospheric pattern taking shape would portend a warm December, all guidance “congealed more solidly” around the idea by Monday, according to Bespoke Weather Services. This pattern may flood much of the country with warmer air once again, similar to what was seen in November.

“With these changes, it looks quite likely that we will see a December at least as warm as the last couple of Decembers, which would place it in the Top 10 warmest of all time, right on the heels of the fourth warmest November on record,” Bespoke chief meteorologist Brian Lovern said. “In short, the domination of warmth is set to continue.”

Soft Spot Gas Prices

“Spot gas prices were soft to start the week, falling across the Lower 48 as any semblance of winter weather was set to quickly dissipate in the near future,” according to Natural Gas Intelligence.

NatGasWeather said the East was expected to be “a touch cool” the next few days as one weather system exits the Northeast, while a second system spins up over the Southeast and tracks up the Mid-Atlantic Coast. However, most of the rest of the United States were forecast to be “quite comfortable” with daytime temperatures reaching the 40s to 70s.

The warmest weather was forecast in Texas, the Plains and the South, according to NatGasWeather. The West may cool late in the week as weather systems were expected to bring rain and snow before tracking into the central part of the country this weekend. “It was these systems that backed off the amount of cold last week to disappoint.”

Short-Term Outlook

Previously bullish traders are throwing in the towel on a December rally, hoping for a reset of winter in January. Prices will continue to move lower until the weakest long is blown out. After posting huge long open interest at the end of October, the market has to reset with huge short open interest before we’ll see the start of any meaningful rally.