Natural Gas Price Fundamental Daily Forecast – Neutral Weather Forecast May Generate Short-Term Pressure

It was hot over the week-end in most parts of the U.S., however, natural gas is trading lower early Monday because this was expected. All week long, the forecasts had been calling for hot temperatures. Prices rose sharply last week in anticipation of the jump in temperatures.

At 0846 GMT, July Natural Gas is trading $2.949, down $0.014 or -0.47%.

Traders are already moving on to the next forecast that calls for the heat to continue this week, but temperatures to turn more seasonal next week. So we could be looking at increased demand this week and lower demand next week for a combined neutral reading.

The current price action suggests this phase of the developing rally has run its course and the market may be ripe for a near-term correction.

The chart pattern shows a wave of selling came into the market after prices touched $2.994, just short of the January 30 main top at $3.010. The higher-high, lower-close chart pattern on Friday suggests the selling may be greater than the selling at current price levels.

A trade through $2.942 will confirm this assessment. This move could trigger the start of a 2 to 3 day correction.

The near-term range is $2.804 to $2.994. If the potentially bearish chart pattern is confirmed and a 2 to 3 day sell-off ensues then look for a possible pullback into $2.899 to $2.876. Since the main trend is up, buyers are likely to show up on a test of this zone.

Essentially, the intermediate-term outlook for the market is bullish because of concerns over the current supply deficit carrying over into the summer cooling season. Short-term, however, the market may be ripe for a correction due to technically overbought conditions and a slight change in the weather forecast.

Of course, prices could spike higher at any time if the weather services put heat back into the forecast.