Natural Gas Price Fundamental Daily Forecast – New Resistance Established at $3.055 to $3.086

Natural gas futures plunged on Thursday after a U.S. government report showed a higher-than-usual weekly storage build amid a change in the weather forecast calling for light cooling demand into the end of September.

November natural gas futures settled at $3.007, down $0.142 or -4.51%.

According to the U.S. Energy Information Administration, utilities added 97 billion cubic feet of gas into storage during the week-ended September 15. This was slightly higher than analysts’ 91 bcf injection forecast.

That compares with a 54 bcf increase during the same week a year ago and a five-year average rise of 73 bcf for that period. It was a third week in a row that injections were larger than usual.

The especially large injection, or one that was well above the five-year average, was not a surprise due to the cool temperatures and power outages brought on by Hurricane Irma.

Forecast

Prices could continue to fall as demand was forecast to decline over the next two weeks. The market is giving back gains from earlier in the week as traders react to a new 8 to 14 day forecast calling for cooler temperature patterns.

Looking ahead to next week, Thomson Reuters is projecting U.S. gas consumption to fall to 72.4 billion cubic feet per day next week from 72.8 bcfd this week. The expected gas use over the next two weeks, however, is expected to be up from 67.7 bcfd seen last week when Irma knocked out power to millions in the U.S. Southeast and brought cooler, wetter weather to much of the eastern half of the country.

Reuters also said that U.S. exports are expected to average 8.6 bcfd this week, up 65 percent from a year earlier.

Despite the huge sell-off on Thursday, the market is still rangebound, supported by two main bottoms at $2.957 and $2.954. A trade through these levels will change the main trend to down according to the daily chart. If they fail then we could see an acceleration into the major bottom at $2.886.

The short-term range is $2.957 to $3.214. Its technical 50% to 61.8% retracement zone at $3.055 to $3.086 is new resistance.