Natural Gas Price Fundamental Daily Forecast – Forecast Calls for Increasing Demand This Weekend

Natural gas futures are trading slightly higher on Tuesday in what looks to be a technical adjustment to several days of weakness, following the September 17 bearish closing price reversal top. The selling pressure has been largely fueled by a larger-than-expected government storage report and a warm pattern into October that could curb heating demand.

At 13:09 GMT, November natural gas is trading $2.564, up $0.009 or +0.35%.

Short-Term Weather Outlook

According to NatGasWeather for September 24-30, “A messy pattern this week as numerous weather systems impact the US with showers and cooling. One system will exit New England today, while a more prominent cool shot will arrive mid-week across the Northwest to Northern Plains with lows of 30s and 40s. A warm tropical system will bring showers to the Southwest, cooling Las Vegas and Phoenix into the 80s and 90s, down from 100s. Texas across to the Southeast will continue to be very warm to hot with highs of mid-80s to lower 90s. Overall, lighter demand this week versus last week before increasing this weekend.”

Weekly U.S. Energy Information Administration Storage 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. Inside this zone is a short-term resistance area at $2.628 to $2.656. Since the trend is down, look for sellers to come in on a test of this zone. They will be trying to form a secondary lower top.

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.

Concerns over demand are likely to keep a lid on prices this week. We may even see a weak to rangebound trade until Thursday when the EIA reduces its latest inventories data.