Natural Gas Price Fundamental Daily Forecast – Increasing Downside Momentum Makes $2.890 Viable TargetStrong production coupled with low demand is weighing on prices on Wednesday. This trend is likely to continue unless the forecast changes drastically.
Natural gas prices are trading lower on Wednesday, reaffirming its downtrend which was reaffirmed on Monday when sellers took out the previous main bottom at $3.283. The price action suggests a bearish weather pattern may be in the works and perhaps parts of the U.S. won’t experience the cold snap that was being forecast around January 4 to January 7.
At 1150 GMT, March natural gas is trading $3.160, down $0.101 or -3.10%.
Short-Term Weather Outlook
According to NatGasWeather for December 24 to December 30, “A weak cool front with light snow showers will sweep across the Great Lakes and Northeast Christmas Eve & Christmas Day, followed by rapid warming for the second half of the week where highs will reach the 40s and 50s. A stronger weather system will bring rain and snow to the West the next few days, then tracking into the central US and Texas Wednesday-Friday, then finally into the East next weekend. The South, Southeast & up the Mid-Atlantic Coast will be mild to warm with highs of 50s to 70s. Overall, national demand will be low until next weekend.”
Strong production coupled with low demand is weighing on prices on Wednesday. This trend is likely to continue unless the forecast changes drastically. As of Monday’s close, traders were anticipating some cold to return January 4 to January 7. However, today’s price action suggests the weather services may be taking this forecast off the market.
Downside momentum is definitely increasing which means the November 2 bottom at $2.890 is a viable target. Trading on the weak side of the major Fibonacci level at $3.546 is also helping to solidify the current downside bias.