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James Hyerczyk
Natural Gas

Natural gas futures are treading water on Wednesday in response to a forecast calling for a slight change in temperatures to the modest side. The prediction earlier this week called for widespread above-normal temperatures. Bespoke Weather Services said its latest 15-day forecast early Wednesday came in slightly cooler overall compared to Tuesday’s outlook.

At 14:20 GMT, September Natural Gas futures are trading $1.779, down $0.008 or -0.45%.

Short-Term Weather Outlook

According to NatGasWeather for July 15-21, “Very hot upper high pressure continues to stretch from California to Texas with highs of 100-110s, while hot and humid across the South and Southeast with mid-90s. A comfortable cool shot will keep the Northern Plains/Upper Midwest comfortable the next few days with highs of 70s to low 80s. Hotter conditions will spread across the Great Lakes and Northeast late in the week with highs of upper 80s to 90s for stronger national demand with the only comfortable region soon to be the Northern Rockies/Northern Plains as the Northwest also heats up.”

For Wednesday, NatGasWeather says, “The overnight GFS model was little changed, losing 1-2 CDDs. The European model lost 3 CDDs but was still quite hot and again hotter versus the GFS model by more than 10 CDDs. No change overall as they both forecast a solidly hotter than normal overall US pattern through the end of July. Sure, it’s not quite as hot as the data showed last week, but hotter than normal nonetheless with national demand stronger than normal for smaller builds to come.”

Of course, it would be more intimidating if not for surpluses at 450 Bcf, supplies over 3.1 Tcf, and LNG feedgas at only 3.0-3.5 Bcf/day. It’s been up to the nat gas markets to decide if the 15-day forecast is hot enough to warrant higher prices, and so far, major players haven’t shown much interest in bidding up prices.”

Daily September Natural Gas
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Daily Forecast

Technically, the main trend is up according to the daily swing chart. A trade through $1.989 will signal a resumption of the uptrend. The main trend changes to down on a trade through $1.583.

The minor trend is also up. A move through $1.765 will change the minor trend to down. This will also shift momentum to the downside.

On the upside, the resistance zone is $1.874 to $1.942.

On the downside, the support zone is $1.786 to $1.738. This zone is very important because buyers are trying to form a potentially bullish secondary higher bottom. If successful, this could lead to a retest of $1.989 or possibly a breakout over this level if the hot weather extends into August.

The bias remains to the downside because the way of least resistance is down. All sellers have to do is take out $1.738 with conviction and prices could collapse.

Any rally is likely to be labored because of the large number of resistance levels in the way that could prove to be attractive to hedgers.

For a look at all of today’s economic events, check out our economic calendar.

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