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Natural Gas Price Fundamental Daily Forecast – Early Weakness as Forecasts Indicate Return to Seasonal Temperatures

Look for a strong downside bias on a sustained move under $2.696. Watch for a neutral trade if prices hold between $2.696 and $2.750. The bias will shift to the upside if buyers can overcome $2.750. Look for volatility with the release of the mid-session weather forecasts. 
James Hyerczyk
Natural Gas

Natural gas futures are trading lower early Monday. The price action suggests the weekend weather forecasts were on the bearish side. On Friday, traders were likely looking for a gradual move back to colder, but today’s early price action indicates the outlook may have changed to a return to more seasonal temperatures.

At 08:20 GMT, January natural gas futures are trading $2.669, down $0.081 or -2.95%.

Short-Term Weather Outlook

According to NatGasWeather for November 15 to November 21, “A reinforcing cold shot will sweep across the Great Lakes and Northeast Friday- Sunday with chilly lows of 10s to 30s. A second milder system brings heavy showers to the Southeast with lows of 30s and 40s. The Western and central US will be mild with highs of 50s to 80s, coolest Northwest. A weather system will track across the East/Southeast early next week, just not a very cold one. Mild conditions will cover the rest of the US early next week with much lighter national demand. A stronger cold shot is expected into the northern US late next week. Overall, high national demand through Sunday, then moderate early next week.”

U.S. Energy Information Administration Weekly Storage Report

On Thursday, the EIA reported a 3 Bcf injection into U.S. natural gas stocks for the week-ended November 8, extending the refill season. The 3 Bcf build was on the higher side of the consensus, but bullish versus the historical comparisons, as last year the EIA recorded a 42 Bcf injection for the period, and the five-year average is a 30 Bcf build.

Total stocks now stand at 3.732 trillion cubic feet, up 491 billion cubic feet from a year ago and 2 billion cubic feet above the five-year average, the government said.

Early Look at This Week’s EIA Report

The Desk’s Early View storage survey Friday showed 20 respondents predicting a median 89 Bcf withdrawal for the week ended November 15, with expectations ranging from a withdrawal of 65 Bcf up to a 102 Bcf pull.

Daily January Natural Gas

Daily Forecast

The main trend is down according to the daily swing chart. A trade through $2.785 will change the main trend to up. A move through $2.660 will signal a resumption of the downtrend.

The daily chart is wide open to the downside under $2.660, so don’t be surprised by an acceleration to the downside.

The major range is $2.521 to $2.980. The market is currently straddling its retracement zone at $2.750 to $2.696. Trader reaction to this zone will help determine the near-term direction.

Look for a strong downside bias on a sustained move under $2.696. Watch for a neutral trade if prices hold between $2.696 and $2.750. The bias will shift to the upside if buyers can overcome $2.750.

Look for volatility with the release of the mid-session weather forecasts.

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