Natural Gas Price Fundamental Daily Forecast – Have We Seen the Worst of the Selling This Injection Season?

Thursday’s technical closing price reversal bottom and Friday’s subsequent confirmation of the potentially bullish chart pattern may be the first indications that natural gas has tip-toed into a weather market. I say tip-toed because during a normal weather market, we’d see increased volatility and wider ranges. All we’re looking at after two days of trade are signs that the buying may be greater than the selling at current price levels.

Last week’s price action suggests that traders have gotten used to triple-digit builds. They have been consistently above 100, but we haven’t see that blow-out number this year that typically drives the market into a freefall. We’ve seen normal selling waves, but we’ve also seen evidence of buyers coming in to defend previous bottoms.

So going forward, I have to conclude that unless there is a complete miss to the upside in the next 2 to 3 U.S. Energy Information Administration weekly storage reports, we may have seen the worst of the selling this injection season.

Natural gas traders are already zeroing in on the weather for the first week in June and the EIA report for the week-ending June 6. This gives bullish traders some time to build a support base.

On Friday, natural gas prices rose after producing a reversal bottom the previous session. The move may have been fueled by comments from NatGasWeather. The experts said that their midday Global Forecast System showed “impressive early season heat” for the southeastern United States from previous guidance. Holding back the rally, however, were forecasts for comfortable temperatures for Chicago to New York City.

Looking forward, bullish traders will be watching for further confirmation of heat the first week in June.

We do expect some volatility early this week with traders returning from a long holiday weekend and the June futures contract set to expire.