Natural Gas Price Fundamental Daily Forecast – Late-Season Heat Providing SupportIt’s becoming highly unlikely that the Saudi attacks are helping to support prices. However, it is clear that the warmer trends over the 11- to 15-day period are helping to underpin prices. This should be your near-term focus.
Natural gas futures are edging slightly lower on Tuesday, but the market continues to hover close to multi-month highs. Several factors contributed to yesterday’s surge in prices including warmer forecast changes and broader energy market volatility due to the attacks in Saudi Arabia. Futures traders may have also been following higher spot prices.
At 06:52 GMT, November natural gas is trading $2.721, down $0.004 or -0.15%.
Technically, the upside momentum and volatility generated by the recent massive short-squeeze remain intact, however, we should find out within a day or two if the rally was related to the events in the Middle East or just a sympathy rally due to the extraordinary surge in crude oil prices on Monday.
Fundamentally, It’s All About Weather.
Maxar’s Weather Desk noted “large warm changes” over the weekend for the eastern half of the country in its updated six- to 10-day forecast Monday.
“Much above-normal temperatures are forecast in the Midwest, South and East, with early peaks in the mid-80s in Chicago and low 90s around mid-period in the Mid-Atlantic,” Maxar said. “Light offshore flow will have aboves in California as well, while rounds of unsettledness keep the Northwest closer to normal.”
Further out in the 11- to 15-day period, Maar also noted warmer trends compared to Friday’s expectations.
“Warm changes are focused in the Eastern Half under continued above to much above-normal coverage,” the forecaster said. “…Despite some disagreement from the models in the regional details, general warm support has confidence being at moderate levels overall.”
It’s becoming highly unlikely that the Saudi attacks are helping to support prices. However, it is clear that the warmer trends over the 11- to 15-day period are helping to underpin prices. This should be your near-term focus.
Furthermore, the tropical disturbance near the Texas coast is something that should be watched since it could develop into something significant over the short-term.
Technically, holding above $2.691 will continue to generate an upside bias. Falling below this level will indicate the buying is getting weaker. A trade through $2.585 will indicate the selling is getting stronger and a move through $2.551 will change the main trend to down.