Natural Gas Price Fundamental Daily Forecast – Less Heat, Low LNG Demand Capping Gains Ahead of EIA Report

Natural gas futures are being pressured for a fifth straight session on Wednesday as traders reacted to bearish news about wind generation curbing the bullish effect of peak summer heat in the forecast this week, cited Natural Gas Intelligence (NGI).

At 16:27 GMT, September natural gas futures are trading $4.040, down $0.049 or -1.20%. This is down from $4.205, hit on August 4.

Bespoke’s Short-Term Outlook

From a national gas-weighted degree day standpoint, widespread heat over the eastern half of the country this week will result in the hottest stretch of the summer, according to Bespoke Weather Services, NGI reported.

“Muting the bullish effect of the strong heat, however, remains much higher wind versus what we saw last week and the week before, although the wind declines back to low levels by Friday and into the weekend,” Bespoke said. “Heat pulls back into early next week, but into the final third of August, another round of above normal heat is favored in the Midwest and East.”

EBW Chimes in with Its Own Assessment

EBW Analytics Group analysts told clients early Wednesday that they expect the peak summer temperatures to help the September contract hold above the psychological $4.00 level.

“Simultaneously, though, a major dip” in liquefied natural gas (LNG) feed gas demand in the Gulf Coast, which was “partially reversed” in Wednesday’s data, and “very high wind generation (expected to fade soon) have kept prices at Henry Hub in check, limiting the ability of futures to move higher,” the EBW analysts said. “How long this deadlock persists could depend upon this week’s storage report and continued forecast shifts.”

Daily Forecast

The main trend is up. The minor range is $3.837 to $4.205. Its 50% to 61.8% retracement zone at $4.021 to $3.978 is potential support. This area provided support earlier in the session.

A sustained move over $4.021 will indicate the presence of buyers. The first potential resistance is $4.092. Overtaking this level will indicate the buying is getting stronger. This could trigger a surge into $4.205.

A sustained move under $3.978 will signal the presence of sellers. This could trigger a sharp break into the support cluster at $3.850 – $3.837.

Ahead of Thursday’s government storage report, traders are looking for the Energy Information Administration (EIA) to report a 51 Bcf injection.

In other news, traders are also watching Tropical Storm Fred that could impact Florida over the next few days. So far, the forecasts call for a lot of rain. If it does form into a hurricane, and if it makes landfall, it will likely be bearish for prices because it would lead to lower cooling demand.