Natural Gas Price Fundamental Daily Forecast – High Heat Could Spike Market to $3.234 Over Near-term

Natural gas futures soared on Tuesday as reports surfaced stating that this week is likely to be the hottest so far this summer. The reason for the rally is a hot dome of high pressure, dominating much of the country with highs of 90s and 100s.

August Natural Gas futures closed at $3.047, up $0.118 or +4.03%.

Forecast

On Tuesday, the market blew through a short-term technical retracement zone at $3.011 to $2.977. The initial move probably was fueled by buy stops as weak short were taken out of the market. The true test of the strength of the market will be whether enough buyers come in to support this market over the retracement zone.

Therefore, look for the upside bias to continue as long as buyers can hold the market over $2.977. A sustained move under this price will indicate the presence of sellers and that investors have already priced in the heat and are looking ahead to another forecast.

If the forecast continues to show a lingering heat dome over the next two weeks or so, look for the market to continue to spike higher.

The charts indicate that $3.127 is the trigger point for a potential surge into $3.234 over the near-term.

Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly storage report, traders are pricing in a build of about 56 billion cubic feet for the week-ended July 7. This is lower than last week’s number, the increase from a year ago and below the five-year average.

Overall natural gas demand is expected to be strong, temperatures could remain hot until July 23 and shorts are covering. With all of this occurring simultaneously, the market seems ripe for a breakout rally into at least $3.234 over the near-term.

All bets are off if the market can’t hold above $2.977 and the weather forecast changes.