Natural Gas Price Fundamental Daily Forecast – Low Demand Could Drive Market into $2.440 to $2.368

Natural gas futures are trading lower on Wednesday shortly ahead of the regular session opening. The market is still being pressured by concerns over weaker heating demand heading into October due to a near-term heat pattern. Meanwhile, the daily trend has turned down for the first time in several weeks with room to fall until it reaches a short-term objective.

At 11:49 GMT, November natural gas is trading $2.504, down $0.021 or -0.83%.

Short-term Weather Outlook

According to NatGasWeather for September 25 to October 1, “A fresh cool shot will sweep across the Midwest the next few days with highs of upper 50s and 60s with lows of upper 30s and 40s. A warm tropical system will bring showers to the Southwest, cooling Las Vegas and Phoenix into the 80s and 90s, while Texas across to the Southeast will continue to be very warm to hot with highs of mid-80s to lower 90s. Overall, lighter demand through Friday, then increasing Saturday through Tuesday as high pressure strengthens across the South & East. Overall, light demand through Friday, then increasing this weekend into next week.”

Early Look at Energy Information Administration Report

Energy Aspects is looking for an 89 Bcf injection. The higher build reflects a 1.7 Bcf/d week/week decline in power burns, according to the firm.

Last week, the EIA reported an 84 Bcf injection into U.S. natural gas storage for the week-ended September 13. This was higher than the consensus estimate of 75 Bcf.

Last year, the EIA recorded an 84 Bcf build for the period, and the five-year average is an injection of 82 Bcf.

Stocks were 393 Bcf higher than last year at this time and 75 Bcf below the five-year average of 3,178 Bcf, according to the EIA data.

Daily Forecast

Warm weather at the start of October should be bearish, however, we could see some two-sided price action over the next several days due to cooling demand in the south and the expiration of the October futures contract.

The daily chart indicates the market is in a downtrend. If current downside momentum continues then look for a near-term break into at least $2.440 to $2.368. We could see a technical bounce on the first test of this area.

On the upside, resistance is $2.585 to $2.617.