Natural Gas Price Fundamental Daily Forecast – Hurricane Irma Will Drive Down Demand

Natural gas futures continued to weaken on Tuesday as investors reacted to the resumption of production in some parts of Texas and the possibility of a drop in demand due to the end of the summer cooling season.

October Natural Gas futures settled at $2.972, down $0.047 or -1.56%.

Forecast

Prices could fall further on Wednesday due to expectations of lower demand from Florida as the state prepares for the possibility of a direct hit from Category 5 Hurricane Irma this week-end. Demand may already be under pressure because evacuations are already taking place in some parts of the state. It should drop further over the week-end and into next week if the hurricane damages highly populated cities like Miami.

Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly storage report, traders are looking for a build in a range between 58 and 67 billion cubic feet in the week-ended September 1.

That compares with a gain of 30 billion cubic feet in the preceding week, a build of 36 billion a year earlier and a five-year average of 58 billion cubic feet.

The EIA also said that total natural gas in storage currently stands at 3.155 trillion cubic feet, around 7.0% lower than levels at this time a year ago and less than 1.0% above the five-year average for this time of year.

The market is currently straddling a key technical area at $3.011 to $2.971. Trader reaction to this zone is likely to determine the near-term direction of the market. A sustained move over $3.011 will indicate the return of buyers. A sustained move under $2.971 will indicate the selling pressure is getting stronger.