Natural Gas Price Fundamental Daily Forecast – Government Data Shows Less-Than-Expected Build

Natural gas prices plunged early in the session on Thursday due to a bearish weather outlook, but turned around to close higher for the session after government data showed a less-than-expected build.

December Natural Gas futures settled at $3.086, up $0.021 or +0.69%.

According to the U.S. Energy Information Administration, domestic supplies of natural gas rose by 51 billion cubic feet for the week-ended October 13. Traders were looking for build of 59 billion cubic feet.

Total stocks now stand at 3.646 trillion cubic feet, down 179 billion cubic feet from a year ago, and 35 billion cubic feet below the five-year average, the government said.

Forecast

According to an outlook released Thursday by NOAA, winter 2017-2018 will feature a nationwide split between cold and wet conditions in parts of the northern states, while the southern tier will see warm and dry conditions overall.

Weak La Nina conditions are expected to develop this winter, and that may influence the large-scale weather conditions this winter ahead. Last week, NOAA indicated there was a 55 to 65 percent chance of La Nina conditions during the upcoming winter.

The temperature forecast for this winter has a strong La Nina flavor with the highest odds of below-average temperatures from North Dakota to the Pacific Northwest.

Warmer-than-average temperatures are most likely to be found across the southern tier of the United States and parts of New England. A mild winter is typical throughout the South during La Nina winters.

Last winter, a weak La Nina was in place and much of the East into the South and Midwest had one of their warmest winters while the Northwest was colder-than-average.

Thursday’s price action indicates that buyers are willing to defend $3.000. It also shows that the upside is being controlled by the short-term technical retracement zone at $3.099 to $3.119.

Look for a downside bias as long as the market remains under $3.099. Watch for an upside bias to develop on a sustained move over $3.119.

Short-term, the east is warm and the west is cold. This is providing a nice balance for demand. A colder weather system will arrive the Great Lakes and east-central U.S. after. Overall, demand will be moderate to low, but increasing next week.