Natural Gas Price Fundamental Daily Forecast – Mild Start to November Could Drive Market into $3.125 to $3.057

Natural gas futures are under pressure early Monday, pressured by uncertainty over the timing of a warming trend as well as a bearish technical chart pattern.

Traders also continue to react to last week’s bearish U.S. government storage report that showed a bigger-than-expected storage build. Additionally, while the weekly and monthly charts remain bullish, the short-term or daily chart indicates the emergence of short-sellers and this has shifted investor sentiment and momentum to the downside.

At 0822 GMT, December Natural Gas futures are trading $3.171, down $0.054 or -1.67%.

NatGasWeather Outlook

Over the week-end, a new short-term weather forecast was issued by a leading service. NatGasWeather.com for the period October 29 to November 3 says, “A system will track through the Northeast Monday with chilly highs of 30s to near 50F. A mild break will follow over the eastern half of the country mid-week with temperatures warming into the 50s to 70s, locally 80s. A stronger cool shot with heavy showers will push into the central U.S. out of the Northwest/Rockies during the second half of the week, and then into the East next weekend. California and the Southwest will be mostly warm and dry. Overall, swings in national demand the next 7-days, averaging out to moderate.”

The longer-term forecasts, which go out about two weeks, have been confusing traders, who are only looking for consistency. The 10-14 day forecasts have shifted the focus to the potential of warmer temperatures. The sideways-to-lower price action has traders calling for consistency in the forecasts.

NatGasWeather went on to say the longer-term pattern is still mostly mild November 6-9 in most of the data, but the cooler central United States trend November 2-5 will make milder days before and after less impactful. “The focus remains on how long this milder November 6-9 pattern will last, with the data still suggesting around November 12-13 before stronger cold blasts return,” the weather experts said.

Forecast

It looks like the forecast for milder temperatures until around November 12-13 is driving prices lower early Monday. This is likely to keep downside pressure on the market until it changes. Cold weather is expected to return after November 13, however, if the weather change comes earlier than expected then prices can turn higher quickly.

Technically, the main trend is down according to the daily swing chart. A trade through $3.146 today will reaffirm the downtrend. A trade through $3.314 will change the main trend to up.

The range of the September to October swing is $2.840 to $3.409. Its 50% to 61.8% retracement zone is $3.125 to $3.057. This zone is also support on the weekly chart so despite the downtrend, buyer could re-emerge on a test of this zone. Basically, the target zone represents value.

Until the retracement zone is a main bottom at $3.047. Conditions could turn ugly if this bottom is violated. This would represent a major shift in investor sentiment.