Natural Gas Price Fundamental Daily Forecast – Moderate Temps, Ample Supply, Weak Cash Prices Pressuring Prices

Natural gas futures are trading lower on Monday shortly before the regular session opening. The move is a continuation of last week’s steep sell-off that is being fueled by ample supplies and forecasts for cooler temperatures in several key areas in the Midwest and Northeast.

The current downside momentum suggests sellers may take a run at the psychological $2.00 level. We could see a technical bounce on the first test of this level. In fact, I suspect that any rallies this week will likely be driven by technical factors indicating oversold conditions. If there is no technical bounce on a test of $2.00 then prices could accelerate into $1.750.

Due to the oversold conditions, the market may be ripe for a reversal to the upside. However, this move will likely be fueled by short-covering. Furthermore, it will likely be used to set up the next shorting opportunity.

At 11:38 GMT, September natural gas futures are trading $2.060, down $0.058 or -2.73%.

Short-Term Weather Outlook

According to NatGasWeather for August 5 to August 11, “Hot high pressure will rule the West and southern US with highs of upper 80s to 100s, hottest over the Southwest and Texas. A weak weather system will impact the Midwest and East early in the week, followed by a brief break warming mid-week, followed by a brief break warming mid-week before a stronger weather system and cool shot arrives late in the week, but overall highs will be in the 70s and 80s for these regions. Overall, demand will be moderate across the northern US and high across the western and southern US, but only strong enough to intimidate.”

Daily Forecast

Unless there is a technical reversal to the upside, natural gas futures are likely to remain under pressure throughout the session on Monday with the selling being driven by long liquidation and some aggressive short-selling. The catalyst behind the move will be the moderate weather outlook, expectations of another large government storage build on Thursday and weaker cash market prices.