Natural Gas Price Fundamental Daily Forecast – Looking for Buyers to Show Up on Test of $2.921 to $2.892

Natural gas futures weakened for a second day on Tuesday on profit-taking and a gradual rise in output. Traders largely ignored forecasts for hotter weather over the next two weeks that is expected to boost cooling demand.

October natural gas futures settled at $2.955, down 0.034 or -1.14%.

According to Reuters data, U.S. gas production in the lower 48 states increased to an average of 72.7 billion cubic feet per day (bcfd) over the past 30 days from 71.1 bcfd a year earlier. That was still far short of the 73.7 bcfd during the same time in 2015, when output was at a record.

Thomson Reuters is projecting U.S. gas consumption to rise to 78.2 billion cubic feet per day next week from 75 bcfd this week as the weather warms and air conditioning demand increases.

According to the experts at natgasweather.com, “During the second half of the week, a break between weather systems will allow the eastern half of the country to warm into the upper 80s to 90s besides the far north to drive stronger than normal national demand.”

“A weak weather system will sweep across the Great Lakes to Northeast U.S. Friday to Saturday with minor cooling, but still very warm to hot elsewhere.”

“Overall, national natural gas demand will be moderate early in the week then moderate to high.”

Forecast

I think the October natural gas contract is headed to $2.921 to $2.892. Since the trend is up on the daily chart, I expect to see buyers come in on a test of this zone to defend the trend and to try to establish a potentially bullish secondary higher bottom.

Looking ahead to Thursday’s U.S. Energy Information Administration’s storage report, utilities likely added 51 billion cubic feet of gas into storage during the week-ended August 11, putting inventories about 2 percent above normal for this time of year.

If the forecast is correct then that increase would mark the first time since late June that weekly injections topped the five-year average for that period.

Watch the price action and read the order flow on a test of $2.921 to $2.892. Trader reaction to this zone will set the tone for the day.