Natural Gas Price Fundamental Daily Forecast – Future Path of TS Elsa Could Lead to Lower East Coast Demand

Natural gas futures are trading lower late in the session on Tuesday after an attempt to breakout above last week’s high was met by a wall of sellers. A lower close will be a sign of a shift in momentum. If confirmed, this could trigger the start of a near-term correction.

At 20:11 GMT, September natural gas futures are trading $3.648, down $0.020 or -0.55%. This is down from an intraday high of $3.789.

Meanwhile, Tropical Storm Elsa is currently tracking into the eastern Gulf of Mexico and still favored to make landfall over West Florida over the next 36-hours with gusty winds and heavy rains for locally lighter demand. Impacts from Elsa are expected to be minor since she’s favored to remain a relatively weak cyclone. There’s also heavy rains falling along the Texas Gulf Coast due to a stalled boundary and where several inches of rain are expected.

This is a potentially bearish event because it could lead to power outages in Florida. This would weigh on cooling demand. Furthermore, the storm is expected to leave Florida then track along the Eastern U.S. Coast. This could future impact cooling demand if it leads to widespread power outages.

Short-Term Weather Outlook

According to NatGasWeather for July 6-12, “Strong national demand will open the week as hot high pressure brings highs of 90s to the East, while also hot over the West with highs of 90s and 100s besides the immediate coast.

A stalled boundary will bring heavy rain to South Texas and the South but still warm with highs of upper 80s, while also wet over Florida as Tropical Storm Elsa arrives the next few days.

A chilly weather system will track into the Northern Plains today with showers and highs of 60s and 70s, then across the Great Lakes and East late in the week to cool current heat and ease national demand.

However, high pressure will return across the East next weekend with highs back into the 90s for strong national demand.”

Daily Forecast

We’re looking for a short-term dip in the market into a support area over the short-run. The best downside targets are a series of minor retracement levels at $3.472, $3.407, $3.356 and $3.253.

Tuesday’s price action suggests bullish investors aren’t too keen about buying strength at current price levels. It may be too early in the season or they don’t have enough confidence in the short-term weather forecasts. Either way, we’re looking for the buyers to return following a near-term test of the $3.472 to $3.253 support range.