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Natural Gas Price Fundamental Daily Forecast – Near-Term Weather Forecast Supports Lower Prices

By:
James Hyerczyk
Published: Nov 2, 2018, 09:45 UTC

Price could remain under pressure over the near-term because the weather data is offering little certainty on temperature trends past the second week of November.     

Natural Gas

Natural gas futures are trading lower on Friday but remain inside this week’s range, suggesting investor indecision and impending volatility. The price action also suggests investors are looking for consistently in the weather forecasts. . Technically, Thursday’s higher-high, lower-close indicates the selling is greater than the buying at current price levels.

At 0915 GMT, December Natural Gas is trading $3.196, down $0.041 or -1.27%.

U.S. Energy Information Administration (EIA) Report

Besides issues with the weather forecasts, traders were also responding to the latest weekly storage data from the U.S. Energy Information Administration (EIA).

The EIA reported a 48 Bcf injection into Lower 48 natural gas stocks for the week-ending October 26. This was slightly below the estimates, but traders sold the market anyway due to the uncertainty over the weather. This put an end to the three-day rally and threatened to turn the market lower for the week.

Ahead of the EIA report, analysts were looking for a storage injection of around 50 billion to 55 billion cubic feet. The five-year average for the week is an injection of 62 billion cubic feet, and last year’s storage increase for the week totaled 65 billion cubic feet.

Additionally, total U.S. stockpiles decreased slightly week over week to 16.5% below last year’s level and also fell slightly to 16.9% below the five-year average.

The EIA report also reported that U.S. working stocks of natural gas totaled about 3.143 trillion cubic feet at the end of last week, around 638 billion below the five-year average of 3.781 trillion cubic feet and 623 billion below last year’s total for the same period. Working gas in storage totaled 3.766 trillion cubic feet for the same period a year ago.

U.S. Natural Gas Weather Forecast

According to NatGasWeather.com for the period November 2 to November 8, “A weather system with heavy showers will push through East the next couple days with heavy showers and slightly chilly conditions as lows drop into the 30s and 40s. Warm high pressure will cover the western and southern U.S. this week-end with mild to warm conditions, which will expand to include the East next week where highs will reach the 50s to 80s, including near 70F to New York City. A cool shot into the central U.S. next week will gradually push into the southern and east-central U.S. as the week progresses with lows of teens to 30s. Overall, swings in national demand the next 7-days, averaging out moderate to low.

Forecasts

Price could remain under pressure over the near-term because the weather data is offering little certainty on temperature trends past the second week of November.

The weather forecasts call for warmer trends early next week and cooler trends for November 9 – 14, but nothing lingering and nothing to suggest a deep freeze. Traders are looking at the November 15 to November 18 for a potential major shift in temperatures to cold. NatGasWeather is saying, “Clearly, if cool shots were to continue for the third week of November, deficits wouldn’t have much opportunity to improve.”

The daily chart continues to indicate that $3.125 to $3.057 is the best value area for buyers.

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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