Natural Gas Price Fundamental Daily Forecast – Despite Intense Heat, Buyers Struggling to Overcome $7.461

Natural gas futures are trading slightly lower on Tuesday after jumping more than 6.50% the previous session on forecasts for hotter weather and more demand this week than previously expected. Traders are also monitoring the events in Europe where Russia may or may not reopen the Nord Stream pipeline on July 21 as previously planned.

Despite the bullish conditions, U.S. gas futures lag far behind global prices because the United States is the world’s top producer, with all the fuel it needs for domestic use, while capacity constraints limit LNG exports.

At 12:20 GMT, September natural gas futures are trading $7.121, down $0.261 or -3.54%. On Monday, the United States Natural Gas Fund ETF (UNG) settled at $25.34, up $1.10 or +4.54%.

‘Super-Hot’ Temperatures Expected

“The pattern remains in super-hot mode,” Bespoke Weather Services said Monday, adding its forecast calls for a few record gas-weighted degree days (GWDD) over the next two weeks. That would put the market “on pace for a July that ranks among the top three hottest months on record in terms of total GWDDs.

This includes a continuation of blistering heat in places like Texas, where the hottest weather comes the next three days, bringing up the chance for at least one day of 110 in Dallas, Natural Gas Intelligence (NGI) reported.

“Looking ahead,” Bespoke added, “we have little reason to think we will not continue to see above normal heat on into at least the first part of the month of August, keeping weather easily on the supportive side.

All Eyes on $8.00 Natural Gas

Technically speaking, the September natural gas futures market is facing a wall of resistance at $7.461 to $7.965. Overcoming the upper level of the retracement zone could trigger an acceleration to the upside, which is one reason why traders are zeroing in on the $8.00 level.

Fundamentally, the $8.00 level is a possibility but the forecast is going to have to remain hot into early August. The current cooling demand is helping to reduce some of the impact of the Freeport LNG export terminal outage. But a rise in production could help slow the process of returning to $8.00.

Short-Term Outlook

The price action the last two sessions suggests buyers have been a little tentative as the market approached a 50% level at $7.461, and short-sellers may have been a little more aggressive.

If the buyers win the battle at $7.461 then we could see an acceleration into the Fibonacci level at $7.965, putting the market just under the key $8.00 level.

If the sellers take control then look for a possible pullback into another key retracement zone at $6.557 to $5.839.