Natural Gas Price Fundamental Daily Forecast – Early Rally Fails as Hopes for Warmer Trends Fizzle

Natural gas futures are edging lower on Tuesday after an early session rally failed. The catalyst behind the selling pressure was a change in the weather forecast that suggested a drop in demand.

According to Natural Gas Intelligence (NGI), forecasters highlighted warming trends from the major weather models overnight, which followed milder trends from Monday’s data.

At 14:37 GMT, March natural gas futures are trading $3.671, down 0.111 or -2.93%.

Bespoke Sees Warmer Changes

“Day after day, it seems we see warmer changes in the nearer term outlook, all while models show colder risks out in the medium range, and today is no exception,” Bespoke Weather Services told clients early Tuesday. “We had thought this trend might finally come to a halt, but the overnight runs again warmed, and at this point we have lower confidence in the actual development of a colder pattern.”

NGI reported models as of early Tuesday continued to show cold developing. However, Bespoke said the projections would need to progress forward in the forecast to raise confidence in the cold actually materializing.

NatGasWeather Sees Similar Warming Trends

NatGasWeather similarly observed warming trends in the overnight model runs. Models advertised less cold from Sunday through Tuesday and favored a “stronger warmer break January 5-7,” the firm said.

The firm also said the data showed milder trends for a cold shot expected to move across the northern and central parts of the country January 7-9.

Daily Forecast

Technically, the trend will change to up on a trade through $3.941. However, don’t expect a breakout to the upside unless buyers can overcome $3.964. This is a potential trigger point for an acceleration to the upside with $4.378 the next likely upside target.

On the downside, a trade through $3.423 will signal a resumption of the downtrend with $3.186 the next likely target.

Fundamentally, should midday model runs “show a notable shift back colder” the potential for a rally into expiration would increase, Bespoke said. Still, “the inability, so far, of the forecast to progress colder makes price action a tougher guess than we had thought it would be heading into expiration, forcing us to take on a more neutral stance, at least until the next set of model runs.”