Natural Gas Price Fundamental Daily Forecast – Need to See More Short-Term Heat to Overcome $3.981 – $4.035

Natural gas futures are trading higher shortly before the regular session opening on Monday. Fundamental and technical factors combined early in the session to fuel an intraday spike to the upside, following a successful test of a minor pivot at $3.859. The early price action suggests some buyers have returned after Friday’s weak finish.

At 11:39 GMT, October natural gas futures are trading $3.938, up 0.072 or +1.86%.

Helping to support the market are reports of increased heat in the near-term forecasts. Bespoke Weather Services said weather models flipped on Friday to the hot side. However, Maxar’s Weather Desk said weather models still showed a cooler air mass migrating through the Midwest and East by around next Friday, August 27.

Short-Term Weather Forecast

According to NatGasWeather for August 22 to August 29, “Heavy rains from remnants of tropical cyclone Henri will exit the Northeast Monday, while comfortable with highs of 70s-80s. Strong upper high pressure will rule the central, southern, and rest of the eastern U.S. with very warm to hot highs of upper 80s and 90s, hottest over Texas and the Southwest with mid-90s-100s. The Northwest to Northern Rockies will be comfortable with highs of 70s to 80s as weather systems bring scattered showers. Overall, national demand will be high the next 7-days, then easing.”

Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported last Thursday that domestic supplies of natural gas rose by 46 billion cubic feet for the week ended August 13. The EIA said the data, however, included an adjustment to the week’s total to account for a reclassification of some gas stocks from base gas to working gas. Working gas is the volume of gas available in the market. The implied flow for the week is an increase of 42 Bcf to working gas stocks, the EIA said.

By comparison, the EIA recorded a 45 Bcf injection into storage for the similar week last year and the five-year average build is 42 Bcf.

Total stocks now stand at 2.822 trillion cubic feet, down 547 Bcf from a year ago and 174 Bcf below the five-year average, the government said.

Daily Forecast

The new short-term range is $4.211 to $3.751. Its 50% to 61.8% retracement zone at $3.981 to $4.035 is the primary upside target and resistance. Since the main trend is down, sellers are likely to come in on a test of this area.

The upper level of the target range at $4.035 is also a potential trigger point for a breakout.

The minor range is $3.751 to $3.967. Its 50% level at $3.859 provided support on Friday and Monday. This may be signaling buyers are starting to return on the dips. If this level fails as support then look for a possible retest of last week’s low at $3.751.

We don’t expect a major rally because of the lack of confidence in the short-term forecast, but we could see a strong rally if the buying hits enough buy stops above $4.035.