Natural Gas Price Fundamental Daily Forecast – Mild Forecast Continues to Weigh on Prices

Natural gas is trading lower after an early session rally failed to attract enough buyers to sustain the move. Technically, oversold conditions helped generate a price surge on Tuesday. Earlier today, however, the rally was stopped by a key resistance level. Fundamentally, traders are likely reacting to changes in the weather reports.

At 1032 GMT, February natural gas is trading $3.643, down $0.099 or -2.62%.

Technically, the main trend is up. However, momentum is trending lower because the minor trend is down. A trade through $3.433 will change the main trend to down. This could create the downside momentum needed to challenge the November 2 main bottom at $3.111.

The main range is $3.111 to $4.849. Its 50% to 61.8% retracement zone is $3.980 to $3.775. Earlier today the rally stopped at $3.794 which was essentially a test of the lower or Fibonacci level at $3.775.

Today’s price action confirms that the retracement zone is resistance.

Short-Term Weather Outlook

According to NatGasWeather for the period December 19-25, “Milder conditions will spread across the northeastern U.S. after a chilly start of the day. The rest of the U.S. remains quite mild with highs of 40s to 50s across the North, with 60s and 70s across the southern U.S. A strong weather system will develop across the South and Southeast today, then track up the East Coast Friday-Saturday with rain and snow, just not very cold. Mild conditions will continue east of the Plains next week apart from a brief cold shot around Christmas Eve/Christmas across the Midwest and East. The West will see occasional weather systems with valley rains & mountain snows for a mix of mild and cool days. Overall, national demand will be low.

Forecast

The failure to follow-through to the upside earlier today serves as proof that yesterday’s rally was technical in nature especially since there were no significant changes in the weather outlook.

Most weather services are saying we could see a few shots of cold over the near-term with nothing significant enough to drive up demand especially in the East.

NatGasWeather continues to watch the December 31 to January 3 time period for the next opportunity for more powerful cold shots to push into the northern United States out of Canada. In the meantime, according to the experts, “the extended mild spell should vastly improve the current storage situation. Deficits could go from 723 Bcf back towards 600 Bcf and potentially 575 Bcf.”