Natural Gas Price Fundamental Daily Forecast – Looking for Minimum Pullback into $5.652 – $5.469

Natural gas futures are inching lower on Wednesday after fading into the close in the previous session following a test of a multi-year high. Some traders are saying the rally at the start of the week was fueled by heightened volatility ahead of the October futures contract expiration. Others are blaming worries about global energy supplies for the spike to the upside.

I think it was fueled by a little of both, but I don’t think professionals were buying. The move was likely triggered by short-covering and aggressive speculators chasing the rally. Those are weak reasons to be going long as multi-year price levels so I think we’re going to see a pullback into a value area before new buyers drive the market higher.

The first support area is $5.652 to $5.469. The second support zone is $5.185 to $4.892.

At 12:32 GMT, December natural gas futures are trading $5.869, down $0.116 or -1.94%.

Short-Term Weather Outlook

According to NatGasWeather for September 29 to October 5, “A messy pattern continues as numerous weather systems impact the U.S. One system is over the Northwest, a second over the Rockies, a third over Texas and the South, and finally a fourth over the Northeast. Temperatures with these systems are in the 50s to 70s besides a warmer one over Texas and the South with highs of 80s.

The rest of the U.S. is nice to very warm with highs 70s and 80s besides locally hotter 90s in the Southwest deserts and into West Texas.

Overall, national demand will be low to very low into the foreseeable future.”

Liquefied Natural Gas Feed Gas Volumes Holding Near Record Levels

U.S. LNG feed gas volumes have held near record levels around 11 Bcf most of this year, interrupted only by storms and maintenance work, Natural Gas Intelligence (NGI) reported.

The energy crunch abroad began with robust draws from storage during large stretches of freezing conditions in Europe and northern Asia last winter. This was followed by a hot summer, unplanned supply disruptions and a pullback in production amid coronavirus outbreaks.

Combined, Rystad Energy analysts say, these factors could threaten economic recoveries from the depths of the pandemic if consumers and businesses cannot afford gas to power homes and businesses.

Daily Forecast

Traders are eyeing the surge in natural gas prices in Europe, but seem to be shrugging off the news as they prepare for the U.S. fall injection season.

Looking ahead to Thursday’s U.S. Energy Information Administration (EIA) storage report, preliminary results of a Bloomberg survey ranged from injections of 84 Bcf to 89 Bcf, with a median of 86 Bcf. NGI modeled a build of 89 Bcf for the week ended September 24.

Look for heightened volatility today, which could result in a choppy two-sided trade. Watch for new buyers on a test of $5.652 to $5.469. But if this area fails as support then look for the selling to possibly extend into the next support zone at $5.185 to $4.892.