Natural Gas Price Fundamental Daily Forecast – Hot Temps Offset by High Production, Spotty Cash Prices

Natural gas futures are trading slightly lower shortly after the regular session opening on Wednesday. However, the inside trading range suggests investors aren’t too confident about the direction of the market at this time. The price action also suggests impending volatility.

The daily chart pattern also indicates that a big move could be in the works. The short-term range is $2.413 to $2.134. It 50% level or pivot at $2.274 has been controlling the direction of the market all week. This is the level to watch today.

The main range is $2.745 to $2.134. If there is a breakout to the upside then its 50% to 61.8% zone at $2.440 to $2.512 would become the primary upside target.

Continued selling pressure under $2.274 could trigger a break into $2.216, followed by the multi-year low at $2.134.

At 12:30 GMT, August natural gas is trading $2.276, down $0.010 or -0.44%.

Mixed news is helping to hold prices in a range today. On the bullish side, the weather models indicating hotter temperatures into late June/early July remain intact. However, cash market prices remain spotty and production is sitting at its highest level in 30 days.

The basic issue holding back prices is that traders don’t think demand will stay elevated after this latest hot spell passes. Bespoke Weather Services thinks temperatures could remain hot over the 10 to 12 days, but after the Fourth of July holiday in the US, demand will likely pull back toward normal.

Short-Term Weather Outlook

According to NatGasWeather for June 25 to July 1, “Weather systems will bring showers and thunderstorms across the northern US although getting warmer across the Midwest and Northeast with highs of upper 80s to lower 90s as far north as Chicago and New York City by late in the week. The southern half of the US will be very warm to hot with highs of 90s over Texas, the South & Southeast, 100s over the Southwest. Overall, demand will increase to moderate, locally high as highs of upper 80s and 90s gains in coverage.”

Daily Forecast

The next short-term move in August natural gas will be determined by trader reaction to the 50% level.  Look for an upside bias to develop on a sustained move over $2.274 and the downside bias to continue on a sustained move under this pivot.

It looks as if the forecasters are going to have to put heat in the forecast beyond July 4 to get the bulls excited and to make the bears nervous.

Thursday’s US. Energy Information Administration (EIA) weekly storage report could move the market but only if there is a big miss to either side. Traders are looking for a 104 Bcf build. With production rising, this may actually come in bigger than expected.