Natural Gas Price Fundamental Daily Forecast – Gapped Lower after Weather Models Trended Lower over Weekend

Natural gas futures are plunging on Monday after gapping lower on the daily and weekly charts overnight. The catalysts behind the extreme selling pressure are bearish weather forecasts for the first half of December, which are expected to drive down heading demand.

At 18:00 GMT, January natural gas futures are trading $5.652, down $0.629 or -10.01%. The United States Natural Gas Fund ETF (UNG) is at $17.28, down $1.80 or -9.43%.

NatGasWeather Identifies ‘Quite Bearish’ Pattern

Two weather models trended warmer over the weekend, according to NatGasWeather, including a “massive” decline of 23 heating degree days in the American model’s outlook.

Both models advertised a “quite bearish” pattern for this week through Dec. 15, showing “much warmer than normal temperatures covering the southern and eastern U.S. most days,” NatGasWeather said.

Mixed Outlook for Dec. 16 – 20

NatGasWeather also said the weekend data did suggest the possibility of colder temperatures and stronger national demand for the Dec. 16-20 time frame, according to the firm.

“However, the weather data had once forecast a frigid U.S. pattern” for the first week of December “only to trend notably warmer,” NatGasWeather said. “Then the weather data also forecast a frosty pattern” for the second week of December “only to again back off considerably.

As a result, market participants are likely to view forecast cold for Dec. 16-20 with skepticism for now, NatGasWeather said.

Freeport LNG Delayed Again

Freeport LNG on Friday again delayed the restart of the second-biggest U.S. liquefied natural gas (LNG) export facility, moving its forecast for resuming processing to year’s end, pending regulatory approval.

This added to the bearish tone because last month, the closely-held company said it was on track to restart the plant in mid-December and would get most of its 15 million tonnes per annum production back by January with a return to full service in March.

“Based upon current progress, and subject to us continuing to meet necessary regulatory requirements, we now anticipate that the restart of our liquefaction facility to be achieved around year end,” Freeport LNG spokesperson Heather Browne told Reuters in an email.

Short-Term Outlook

The shift toward milder temperatures for the first half of December wasn’t the only factor driving the bearish price action. The potential for a gap lower opening on Monday was set up last week with a bearish miss to the EIA storage report and the U.S. Congress voting to prevent a national railway strike.

While the major story remains the call for a hefty warm trend, this is the one likely to contribute the most to the upcoming volatility since the weather can change overnight. Meanwhile, the Freeport LNG situation and the thwarting of the railroad strike are likely to keep a lid on any rallies.