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Natural Gas Price Fundamental Daily Forecast – Early Weakness Driven by Expectations of Lower Demand

By:
James Hyerczyk
Published: Sep 23, 2019, 13:36 UTC

The main trend is down according to the daily swing chart. The trend turned down when sellers took out the last main bottom at $2.551.

Natural Gas

Natural gas futures are trading lower on Monday, following through to the downside after confirming Friday’s potentially bearish technical closing price reversal top. The chart pattern suggests the market could correct 2 to 3 more days. The selling pressure was fueled by a larger-than-expected government storage report and a warm pattern into October that could curb heating demand.

NatGasWeather said, “We mentioned the risk over the weekend was the data could trend further hotter for late September into the first couple days of October, which it did by holding an unseasonably strong upper ridge over the South and East. Both the European and GFS models added 8-10 CDD’s compared to Friday’s data, which would be reasonable if prices traded higher.”

“The data maintains a rather bearish pattern for days 1-5 and 11-15 (Oct 3-7th) with most of the country experiencing light demand besides the very warm southern US. However, the September 27-October 2 time period is now hot enough after further hotter weekend trends to reduce the EIA build three out close to normal instead of above normal.”

Short-Term Weather Outlook

According to NatGasWeather for September 23-29, “A messy pattern this week as numerous weather systems impact the US with showers and cooling. One system will track across the Midwest and New England the next couple days, while a more prominent cool shot will arrive mid-week across the Northwest to the Northern Plains. A warm tropical system will bring showers to the Southwest, cooling Las Vegas and Phoenix. Texas, South and Southeast will continue to be very warm to hot with highs of upper 80s to lower 90s for regionally strong demand. Overall, lighter demand this week versus last week and moderate to low mid-week before increasing next weekend.”

Weekly U.S. Energy Information Administration Report

Last week, the EIA reported an 84 Bcf injection into U.S. natural gas storage for the week-ended September 13. This was higher than the consensus estimate of 75 Bcf.

Last year, the EIA recorded an 84 Bcf build for the period, and the five-year average is an injection of 82 Bcf.

Stocks were 393 Bcf higher than last year at this time and 75 Bcf below the five-year average of 3,178 Bcf, according to the EIA data.

Daily Forecast

The main trend is down according to the daily swing chart. The trend turned down when sellers took out the last main bottom at $2.551.

The nearest major resistance is $2.585 to $2.691.

The short-term range is $2.135 to $2.745. Its retracement zone at $2.440 to $2.368 is the primary downside target. Don’t be surprised if buyers come in following a test of this zone.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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