Natural Gas Price Fundamental Daily Forecast – Milder Forecasts for Early December Capping Gains

Natural gas futures are trading lower on Friday as milder overnight weather forecasts weighed on investor sentiment.

According to NatGasWeather, both the American and European weather models dropped forecast demand overnight by showing less cold over the northern part of the country during the last week of November.

At 15:35 GMT, January natural gas futures are trading $6.735, down $0.009 or -0.13%. This is up from an intraday low of $6.425. The United States Natural Gas Fund ETF (UNG) is at $20.47, down $0.13 or -0.63%.

“The overnight data held very strong national demand through early next week but still with demand easing to seasonal levels…if not a little lighter than normal for several days” between next Wednesday and Nov. 30, NatGasWeather said.

It’s possible the weather data could “trend back colder” for this time frame, “but even then, the pattern is still expected to be closer to seasonal with near normal demand,” the firm added.

Bearish Weather Pattern Could Extend into December

Looking further out, recently released longer-range forecasting “suggested a seasonal to slightly bearish pattern should be favored to start December,” NatGasWeather said. “If this holds over the weekend, the pattern for the five- to 15-day period won’t be quite cold enough when the natural gas markets reopen Sunday.”

Weekly Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported on Thursday that domestic natural gas supplies rose by 64 billion cubic feet (Bcf) for the week ended November 11. That compared with an average analyst forecast for an increase of 62 Bcf, according to a survey conducted by S&P Global Commodity Insights.

Total working gas stocks in storage stand at 3.644 trillion cubic feet, up 4 Bcf from a year ago, but 7 billion below the five-year average, the government said.

Short-Term Outlook

The short-term weather forecast suggests gains could be limited if December starts with seasonally normal temperatures.

Technically, the key area to watch is a short-term retracement zone at $6.573 to $6.354. Look for an upside bias to develop on a sustained move over $6.573 and a bearish tone to develop on a sustained move under $6.354.

Fundamentally, the wildcard remains the timing of Freeport LNG’s restart. Prices should firm when Freeport makes the announcement because this will lead to increased demand.

The most bullish combination for traders will be colder-than-normal weather and renewed Freeport demand.