Natural Gas Price Fundamental Daily Forecast – Dangerous Weekend Ahead Due to Potential Big Weather Shifts

We’re likely to see more consolidation today as traders may be reluctant to take big positions ahead of the unpredictable weekend. The chart pattern suggests a gap opening is likely for Monday so be prepared for heightened volatility at the start of next week.
James Hyerczyk
Natural Gas

Natural gas futures are inching lower early Friday as confusing weather forecasts continue to limit the price action in either direction. Traders received no help from yesterday’s government weekly storage report which came in lower than expected, but inside a wide range of estimates. The technical chart pattern this week suggests investor indecision. However, it also indicates impending volatility, which could mean a breakout move is coming once traders get some clarity.

At 06:02 GMT, January natural gas is trading $2.411, down $0.016 or -0.66%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported on Thursday a 19 Bcf pull for the week-ending November 29. Ahead of the report, estimates for the withdrawal ranged widely from a draw of just 8 Bcf to a draw of as much as 33 Bcf. Some traders said that last week’s U.S. Thanksgiving holiday week may have skewed the data.

Total stocks now stand at 3.591 trillion cubic feet, up 591 billion cubic feet from a year ago, but 9 billion cubic feet below the five-year average, the government said.

The EIA recorded a 62 Bcf withdrawal in the same week last year, and the five-year average stands at 42 Bcf.

Latest Weather Outlook

“The models remained starkly at odds, although the much milder European model added some demand to its outlook in the afternoon run. After the Global Forecast System (GFS) model trended colder midday in a rather bullish pattern December 11-18. It was of considerable interest to see what the afternoon European model would show since it’s been running nearly 35-40 heating degree days (HDD) milder comparatively,” according to NatGasWeather.

“The afternoon European model added 5-6 HDDs versus Wednesday night’s run, but only 1 HDD versus its run the previous 24 hours. As such, the difference between the European and the GFS models remain vast,” the forecaster said.

Production Flows Remain High

Production flow monitors suggest dry gas production may have broached 97 Bcf/d in the final days of November, EBW said. Recent measurements, however, suggest a mind-boggling 4.0 Bcf/d of incremental production from the September average to the end of November.

“Rising supplies heading into the winter have tilted a bearish outlook further in favor of shorts, and contributed to decisive losses in Nymex futures last week,” EBW said.

Daily Forecast

We’re likely to see more consolidation today as traders may be reluctant to take big positions ahead of the unpredictable weekend. The chart pattern suggests a gap opening is likely for Monday so be prepared for heightened volatility at the start of next week.

With weather likely to remain the most critical near-term variable, any further delayed signs of emerging cold will put pressure on prices.

Contrarily, Bespoke Weather services said, “Next week’s (EIA) number will be more interesting now, as it definitely sees some balance tightening showing up in the data, ‘enough so that any decent turn back colder can promote a rally back over $2.50 in prompt-month pricing rather easily, in our view.”

In reference to the lack of clarity in the weather forecasts, NatGasWeather said, “It should make for an interesting Friday ahead of what is going to be another very dangerous weekend to hold due to the potential for big weather trends.”

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.