Natural Gas Price Fundamental Daily Forecast – Gap Leaves -$0.139 Hole in Daily/Weekly Charts

Natural gas futures plunged on the opening Monday, gapping lower on the daily and weekly charts while taking out multiple monthly bottoms along the way. The catalyst behind the selling was weather data that showed milder temperatures with every run of the latest models, according to Natural Gas Intelligence (NGI).

At 20:15 GMT, February Natural Gas is trading $2.359, down 0.153 or -6.09%.

After “gapping and going” into the intraday low at $2.263, aggressive bottom-pickers spent the rest of the session trying to pick a bottom, while clawing back some of the loss. Nonetheless, the gap left a hole on the chart from $2.507 to $2.368 or $0.139.

Short-Term Weather Outlook

According to NatGasWeather for December 27 to January 3, “An unsettled pattern this week as numerous weather systems impact the country. The coldest of the series will track across the Great Lakes and Ohio Valley Monday to Tuesday with rain, snow, and frosty lows of -0s to 30s.

A second chilly system will sweep across California and the interior West Monday – Tuesday, then into the Plains mid-week with lows of 10s to 30s. The rest of the U.S. will be mild with highs of 40s to 70s, warmest across the far southern U.S.

Additional weather systems will track across the U.S. late in the week, although rather mild with highs of 30s to 50s.

Overall, moderate to locally strong national demand Monday to Wednesday, then easing to low late in the week through next weekend.

NatGasWeather Recap

NatGasWeather’s recap of the bearish events on Monday suggests the groundwork for the move was laid out in Thursday’s holiday-shortened session.

“Jan’21 nat gas futures sold off sharply Thursday ahead of the long Christmas Holiday weekend to close 9 cents lower at $2.52. Selling accelerated just ahead of the early Thursday close as the midday GFS model trended notably milder for late December and early January. Bearish production trends last week also contributed to selling as it increased more than 1 Bcf to 91 Bcf/day, as did a bearish EIA weekly storage miss Wednesday. The weekend weather data trended further milder with the GFS losing 12 HDD’s but the European model (EC) a heftier 25+ HDD’s. With weather data yet again disappointing, prices are sharply lower.”

Short-Term Outlook

There’s not much to say after Monday’s steep break except bullish traders have to go back to work to repair the damage, while short-sellers have the luxury of sitting back and waiting for speculative longs to come to them. The short-sellers are in control and likely to add to positions on rallies until the strategy is proven wrong with the emergence of colder temperatures and greater heating demand.