Natural Gas Price Fundamental Daily Forecast – Light Short-Covering as Traders Continue to Digest Last Week’s Plunge

Natural gas futures are trading higher on Tuesday shortly after the regular session opening as colder U.S. weather data is encouraging traders to cover their short-positions. The move is nothing to get too excited about. Traders are basically clawing back some of Friday’s major sell-off that may have been a little overdone due to the thin post-holiday trading conditions.

At 13:31 GMT, January natural gas is trading $2.410, up $0.081 or +3.48%.

Short-Term Weather Outlook

According to NatGasWeather for December 3 to December 9, “A chilly start across much of the US today but with the western, central, and southern US warming mid-week with highs of 40s to 70s, warmest over Texas and the South. A weather system will exit the Northeast but with a reinforcing cool shot to follow Wednesday through Thursday for locally strong demand. Warm high pressure will strengthen across the southern and eastern U.S. late this weekend into early next week with warmer than normal conditions. Overall, moderate national demand through Saturday, then light Sunday through Tuesday.”

Daily Forecast

We’re just looking at price action and positioning early Tuesday. There is nothing in the works that suggests a support base is forming. With warmer weather expected in several key demand areas over the weekend, it’s going to be hard to mount an extended rally so look for gains to be capped.

I wouldn’t be surprised if the old bottom at $2.475 becomes a new top. Look for sellers to reemerge on a rally into this former support level.