Natural Gas Price Fundamental Daily Forecast – Likely Headed to $2.709 to $2.684

Natural gas futures are trading slightly higher early Monday. Traders are once again watching the weather on the East Coast.

At 0836 GMT, May Natural Gas futures are trading $2.757, down 0.002 or -0.07%.

According to Weather.com, “Winter Storm Skylar will bring heavy snow and gusty winds to the Northeast early this week, marking the third coastal storm to affect the region in a span of fewer than two weeks. Skylar will also lay down a blanket of snow from the Ohio Valley into the Appalachians before its arrival on the East Coast.”

“A more impactful winter storm is looking likely along the coast of New England Monday night into Tuesday. Blizzard conditions are possible with heavy snow and potentially damaging winds. Tuesday morning commutes will be difficult across New England.”

Natgasweather.com says, “Overall, demand will be high with two notable weather systems into the eastern U.S.”

Forecast

The weather could hold prices steady, but remember that investors have probably priced this week’s weather into the market. Most traders are already looking 10 to 14 days into the future. This forecast is likely going to drive the price action this week.

Looking ahead to Thursday’s government report, the early call is for a draw of 100 Bcf. Last week, the Energy Information Administration reported a -57 Bcf change for the week-ending March 2.

The main trend is down according to the daily swing chart, however, momentum has been trending higher since February 16.

The main range is $2.951 to $2.600. Its 50% to 61.8% zone is $2.775 to $2.817. This zone stopped the rally last Thursday at $2.819. The selling was strong enough to produce a potentially bearish closing price reversal top.

The new short-term range is $2.600 to $2.819. Its retracement zone at $2.709 to $2.684 is the primary downside target.

I think the market has to correct into the short-term retracement zone to give traders a chance to reevaluate the supply/demand situation as we approach spring and ride out the last winter storms of the season.