Natural Gas Price Fundamental Daily Forecast – Market Gaps Higher in Anticipation of Intense Cold

The early price action suggests the latest forecasts have the U.S. Global Forecast System (GFS) and the European models lining up for intense cold.
James Hyerczyk
Natural Gas

Natural gas futures gapped higher early Monday with prices hitting their highest level since September 18. In the process, the market crossed decisively to the strong side of a key retracement zone, while taking out last week’s high. Buyers are now likely setting their sights on the September 17 main top at $2.884.

At 06:15 GMT, December natural gas is trading $2.810, up $0.096 or +3.54%.

The gap opening was no surprise, but there was uncertainty about the direction ahead of the weekend. On Friday, NatGasWeather made a comment the mid-term outlook saying, “Demand was most notably added November 12-15 as the GFS favors another strong cold shot into the northern U.S.”

However, it also added that the outlook advertised in the European model Friday “just wasn’t as cold as the GFS. It still has three cold shots into the U.S. the next two weeks, but the one “lining up to arrive closer to mid-November “isn’t nearly as impressive with the amount of cold.”

Based on this assessment, NatGasWeather concluded this sets up “big risks over the weekend whether either the GFS” proves to be “much too cold or the European not nearly cold enough. We must expect a gap depending on which is more correct.”

The early price action suggests the latest forecasts have the U.S. Global Forecast System (GFS) and the European models lining up for intense cold.

“Brutally Cold Air Mass” Coming to Northeast

Zerohedge.com is saying, “An Arctic blast of cold air is likely to roll into the Mid-Atlantic and Northeast regions this coming week, possibly producing one of the first snowmaking weather events of the year by late week.”

“A very cold air mass for early November is poised to impact the Northeast late week into next weekend. A favorable upper atmospheric pattern should allow air from northern Canada to spill into the Great Lakes and Northeast. During this cold stretch, temperatures may average 10-20 degree F below normal for most of the Northeast, including the major cities. This may influence heating oil and natural gas demand, while allowing interior Northeast ski reports to begin making snow for the winter season ahead,” stated Ed Vallee, head meteorologist at Empire Weather LLC.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 89 billion cubic feet for the week-ending October 25. The build came in on the high side of wide-ranging estimates between 66 Bcf and 94 Bcf, although most projections centered an 85 Bcf injection. The build was also higher than last year’s 49 Bcf injection and the 65 Bcf five-year average.

Total stocks now stand at 3.695 trillion cubic feet, up 559 billion cubic feet from a year ago and 52 billion cubic feet above the five-year average, the government said.

Daily December Natural Gas

Daily Forecast

Technically, the main trend is up according to the daily swing chart. The uptrend was reaffirmed early Monday with the gap through last week’s high at $2.738. The new main bottom is $2.575. A trade through this level will change the main trend to down. If the upside momentum continues then look for buyers to take a run at the September 17 main top at $2.884.

The main range is $2.884 to $2.388. Its 61.8% to 50% retracement zone at $2.695 to $2.636 is new support. This zone is controlling the near-term direction of the market.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.