Natural Gas Price Fundamental Daily Forecast – May Need to Rally to Set Up Next Shorting Opportunity

James Hyerczyk
Natural Gas

Natural gas prices are edging higher on Tuesday shortly before the regular session opening with the move likely being fueled by profit-taking and aggressive speculative buying following the test of a new contract low on Monday. Although there is room for a somewhat meaningful short-covering rally, traders aren’t likely to get too excited about a rally unless buyers can take out $2.305 in convincing fashion.

At 10:32 GMT, September natural gas futures are trading $2.138, up $0.022 or +0.99%.

On Monday, NYMEX front-month natural gas futures settled at a second consecutive three-year low amid forecasts calling for cooler-than-average temperatures, as the August futures contract came off the board.

S&P Global Platts Analytics shows power burns “remaining in the range of Monday’s 38.9 Bcf, at an average of 38.8 Bcf/d over the next eight to 14 days.”

Platts Analytics data also shows, “Total US demand to stay flat over the next eight to 14 days, from Monday’s 73.2 Bcf to an average of 73 Bcf/d, dipping slightly to an average of 72.1 Bcf/d over the next week.”

“Dry production is expected to remain at high levels, hovering at an average of 88.9 Bcf/d over the next eight-14 days, pacing above the month-to-date level of 88.3 Bcf/d,” according to Platts Analytics.

Hedge Funds Bearish

According to the U.S. Commodity Futures Trading Commission’s latest Commitment of Traders report, hedge funds increased bearish bets on Natural Gas futures by 37,238 contracts as of July 23.

Short-Term Weather Outlook

According to NatGasWeather for July 29 to August 3, “Hot high pressure will rule the West and Plains with highs of upper 80s to 100s, hottest over the Southwest & Texas. Temperatures will be very warm along the East Coast with upper 80s to near 90 degrees Fahrenheit. However, additional weather systems with showers and cooling are expected across the Midwest and east-central US this week with comfortable highs of 70s and 80s. A warm break between weather systems is expected next weekend. Overall, national demand will be easing to moderate after being high.”

Intermediate-Term Weather Outlook

According to the National Weather Service, “An expansive area of high pressure that has been bringing pleasant and generally dry weather over much of the eastern U.S. over the last several days will gradually give way to a cold front moving steadily across the Plains and Midwest. Southwesterly flow ahead of the cold front will transport notably hotter and more humid air up across the Ohio and Tennessee Valleys and along the East Coast.”

“Temperatures will be above normal for the next couple of days and will be well into the 90s for many major metropolitan areas,” the NWS said. “…In behind the aforementioned front crossing the central U.S., cool high pressure will be nosing south from Canada, and this will bring below normal temperatures across most of the northern Plains and upper Midwest Monday through mid-week.”

Daily Forecast

Comments I have read like, “NatGas Bulls ‘Running Out of Summer’, or “If the market was going to rally, it would have done so by now,” in my opinion, typically mean the market is oversold and ripe for a short-covering rally. It may not be a weather driven move that triggers the rally, however. It may just be the market runs out of sellers with the August contract coming off the board on Monday. Don’t be surprised by a counter-trend rally.

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

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
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.
RISK DISCLAIMER
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.
FOLLOW US