Natural Gas Price Fundamental Daily Forecast – Market Pricing in Another Increase in Weekly Stockpiles

Natural gas futures are trading lower on Tuesday after hitting its lowest level since July 24 earlier in the session. The daily charts indicate there is still room to the downside with $2.785 the next major target, however, yesterday’s “gap and go” price plunge may have put the market into oversold territory, suggesting it may be ripe for a short-covering rally if the sellers decide to let up on the downside.

At 13:28 GMT, January natural gas futures are trading $2.849, down $0.015 or -0.52%.

On Monday, prices plummeted in reaction to bearish weather patterns after Bespoke Weather Services said the forecasts over the weekend were “decidedly” bearish, with demand dropping compared to Friday’s expectations.

NatGasWeather Short-Term Weather Outlook

According to NatGasWeather for November 17 to 23, “A cold shot will track across the Midwest and Northeast today and Wednesday with chilly lows of 10s to 30s for a swing to stronger national demand. The southern U.S. remains nice with highs of 60s to 80s, while weather systems with rain and snow continue into the Northwest with mid highs of 30s to 50s. After the Northeast system exits Wednesday, much of the U.S. will become warmer than normal Thursday-Monday with highs of 40s to 60s North, and 60s to 80s South for light national demand. Overall, moderate demand through Wednesday, then low.

US Energy Information Administration Weekly Storage Report

The EIA reported on Friday that domestic supplies of natural gas rose by 8 million cubic feet for the week-ended November 6. On average, the supply data, which were delayed by a day this week due to Wednesday’s Veteran’s Day holiday, were expected to show a decline of 4 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.927 trillion cubic feet, up 196 billion cubic feet from a year ago, and 176 billion cubic feet above the five-year average, the government said.

Daily Forecast

In addition to the bearish weather forecast, NatGasWeather noted that the Lower 48 production increased from about 86 Bcf to 89 Bcf over the past few days.

Analysts are also expecting another increase in gas stockpiles for the week-ended November 13, followed by withdrawals after that.

The nearby futures contracts are expected to remain under pressure until there is a sudden cold snap in December. However, the deferred contracts could benefit if the weather turns cold enough in December and beyond.

EBW analysts are pointing to strong export demand and the likelihood of tighter balances over the winter months to give next year’s futures contracts a boost.

“The storage surplus that has persisted all year long is likely to quickly dwindle,” EBW said.