Natural Gas Price Fundamental Daily Forecast – Global Supply Concerns Continue to Provide Support

Natural gas futures are trading higher on Tuesday with upside momentum building as traders navigate on the strong side of a key technical area. Prices continue to be supported by global supply concerns, while a slowdown in domestic gas demand may be trying to cap prices.

At 12:43 GMT, December natural gas futures are trading $6.181, up $0.275 or +4.66%.

Underpinned by Global Supply Concerns

Natural gas futures continue to be supported by global supply concerns despite a dampening of domestic supply fears due to milder seasonal temperatures. We can see this taking place on the charts, where traders are coming in on the price dips while selling out on the rallies as the futures market approaches the upper area of its recent trading range.

Natural Gas Intelligence wrote late Monday that “concerns have intensified overseas”.

Additionally, Bloomberg reported that European inventories have reported a couple of days of withdrawals, weeks before first draws are typically seen. Forecasts, meanwhile, are showing the first cold snap moving into Germany by the end of the weekend.

Short-Term Weather Outlook

According to NatGasWeather for October 5 to October 11, “A messy pattern continues as numerous weather systems impact the U.S. this week. One system is over the Northwest, a second tracking into the Southwest, a third over the Southeast, and a fourth over New England.

Temperatures with the northern U.S. systems will reach the 50s to 70s, while the southern U.S. ones are warmer with highs of 80s. The rest of the U.S. remains nice to warm with highs of 60s to 80s besides locally hotter 90s in the Southwest deserts and portions of Texas.

Weather systems with valley rain and high elevation snow will track into the West this weekend and next week with highs of 40s to 60s, while warm to very warm elsewhere with highs of 70-80s.

Overall, national demand will be low to very low into the foreseeable future.”

Daily Forecast

Technically, the key area to watch on the daily chart is $6.060 to $5.947.

Look for the upside bias to continue on a sustained move over $6.060 and for a downside bias to begin on a sustained move under $5.947.

Fundamentally, the dire situation in Europe is producing the bid that is propping up prices, while the low seasonal demand in the U.S. is trying to keep a lid on prices.

With this set-up, all it’s going to take is the mere mention of cold temperatures in the U.S. forecasts to spark another breakout to the upside in my opinion.