Natural Gas Price Fundamental Daily Forecast – Looking for Pull Back into $2.921 to $2.892

Natural gas prices fell nearly one-percent on Monday as investors decided to cash in after a nearly two-week rally. Early in the session, speculators drove prices to a level not seen in nearly three weeks as warmer-than-normal weather forecasts raised prospects for higher cooling demand.

October Natural Gas futures settled at $2.989, down $0.020 or -0.66%.

According to natgasweather.com, during the August 14-20 time period, “The northern U.S. will open the week with comfortable highs of 70s and 80s, along with areas of showers. The western and southern U.S. remain very warm to hot with upper 80s to 100s, but also with areas of thunderstorms.”

“During the second half of the week, a break between weather systems will allow the Midwest and eastern U.S. to warm into the upper 80s to lower 90s, including as far north as Chicago and NYC.”

“A weak weather system will track across the far northern U.S. Friday-Saturday with minor cooling, but still very warm-hot elsewhere.”

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

Forecast

The price action on Monday suggests we may see a slight pullback in the market. However, the chart pattern indicates that this would be a normal retracement. The downside target zone is $2.921 to $2.892.

If buyers step in on a pullback into this area then we could see the start of another surge to the upside. The current chart pattern suggests the bottom at $2.799 is safe at this time, barring any unforeseen fundamental data.

In other news, utilities likely added 51 billion cubic feet of gas into storage during the week-ending August 11, putting inventories about 2 percent above normal for this time of year.

For longer-term traders, utilities are likely to stockpile just 1.7 trillion cubic feet of gas during the April-October injection season. Factors including relatively low output, rising sales abroad and higher-than-average cooling demand earlier this summer are limiting the quantities going into storage.

The projected build, which is below the five-year average of 2.1 tcf, would put inventories at 3.8 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf.

Monday’s price action suggests investors may not be comfortable buying strength so I think natural gas will pull back into $2.921 to $2.892, where I expect buyers to be waiting.