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Natural Gas Price Fundamental Daily Forecast – Now Trading Lower for the Month

By:
James Hyerczyk

Natural gas futures are trading slightly better early Friday. Volume is extremely low and is expected to remain below average with investors extending the

Natural Gas

Natural gas futures are trading slightly better early Friday. Volume is extremely low and is expected to remain below average with investors extending the official U.S. Thanksgiving holiday one more day.

At 0903 GMT, January Natural Gas futures are trading $3.007, up $0.009 or +0.27%.

Natural Gas
Daily January Natural Gas

The recent strong downside momentum has put the market in a position to challenge the November 1 bottom at $2.983. The market is currently trading lower for the month which means it has erased all of this month’s earlier gains from $2.983 to $3.321.

The price action suggests that without a meaningful cold front, prices are likely to remain under pressure and gains will be limited.

Currently, there is nothing in the forecast to suggest a lingering cold spell is coming. This means that barring some seasonal buying, prices are likely to remain weak.

The outlook from natgasweather.com is not very exciting for bullish traders. They are saying that temperatures in key demand areas may turn milder on Friday and Saturday, but that another cool shot could arrive Sunday through Tuesday. This could lead to moderate to high demand.

If you’re going to trade the weather this winter then you should be aware of some of the terms frequently used by the forecasters and there potential impact on prices.

Words like cool, or cold blast are short-term indicators. They could cause price spikes to the upside due to short-covering, but are usually met with a fresh round of shorting pressure.

Longer-term moves are produced by words and phrases such as “cold pressure domes” or “lingering cold front”.

Given the current price action, it is going to be very difficult to generate a bullish move this winter that lasts for months. Firstly, all of the shorts have to be taken out before buyers can truly take control of the price action. Secondly, bullish investors will have to be convinced to add to long positions and normally bearish traders have to be convinced to step aside and let the move work itself out.

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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