Natural Gas Price Fundamental Daily Forecast – Plunges After Forecast Changes to More Seasonal Temperatures

Natural gas futures are plunging on Monday after a gap higher opening failed to attract enough buyers to sustain the move. The buyers didn’t show up because the weather pattern for early December changed. Speculators went home on Friday anticipating a higher opening on a chillier outlook for the first few days of December. The price action suggests investors are now looking for more seasonal temperatures.

At 13:12 GMT, January natural gas futures are trading $2.607, down $0.104 or -3.84%.

Short-Term Weather Forecast

According to NatGasWeather for November 22 – 28, “One weather system will track into the Northeast today, while a second system tracks into Texas and the South. However, these systems won’t bring much added demand since they are only slightly cool for this time of year with highs of upper 30s to 50s. The rest of the U.S. will be mild with highs of 50s to 70s. The Texas system will track into the east-central and eastern U.S. Saturday. High pressure will bring warmer conditions over the eastern half of the country early next week as cold air pours into the West. Overall, moderate demand.”

US Energy Information Administration Weekly Storage Report

On Thursday, the EIA reported that domestic supplies of natural gas fell by 94 billion cubic feet for the week ended November 8. That number marked the first decline of the inventory withdrawal season. Analysts were looking for a draw of about 86 Bcf.

The 94 Bcf figure comes in well above the five-year average pull of 32 Bcf, but shy of the 109 Bcf withdrawal the EIA recorded for the year-ago period.

Bloomberg analysts were looking for a median prediction of 88 Bcf, with estimated withdrawals ranging from 82 Bcf to 99 Bcf. The ICE EIA Financial Weekly Index futures settled Tuesday at minus 87 Bcf. Natural Gas Intelligence (NGI) predicted a 101 Bcf withdrawal.

Total stocks now stand at 3.638 trillion cubic feet, up 506 billion cubic feet from a year ago, but 60 billion cubic feet below the five-year average.

Daily Forecast

Today’s earlier high at $2.743 came in well short of the previous main top at $2.785. The downside momentum created by the move puts the January natural gas futures contract in a position to take out last week’s low at $2.570.

This move will confirm the downtrend and signal the selling pressure is strengthening, which means it could extend into the October bottom at $2.521.