Natural Gas Price Fundamental Daily Forecast – Poised to Breakout to Upside if Weather Forecasts Hold True

Natural gas futures edged higher on Monday despite giving back most of its gains following a surge shortly after the opening. Prices jumped on speculative buying tied to forecasts calling for colder temperatures over the first half of December, which could lead to greater heating demand. The market was also supported by soaring cash market prices.

On Monday, January natural gas futures settled at $2.882 after touching an intraday high of $2.996.

Spot Prices Soar

Natural Gas Intelligence’s (NGI) Spot Gas National Average soared 60.5 cents to $2.825 as temperatures were colder to start the week across the nation’s midsection following benign weather over the long holiday weekend. Chilly rains doused swaths of the East, NGI reported.

Bespoke Weather Services Outlook

Bespoke Weather Services said the potential for a winter freeze after a warm November appeared to be the leading “catalyst for the move higher” on Monday.

“The pattern depicted as we move toward the middle of the month is one that hints at drawing some stronger cold out of Canada into the U.S. pattern,” the forecaster said. “Any true cold could target the middle of the nation most, as the pattern shifts more toward a typical La Nina state.”

EBW Analytics Group Forecast

EBW Analytics Group said that, “following exceedingly mild weather in mid-November and the Thanksgiving holiday,” even briefly cooler temperatures to start the week “may allow weather-driven demand this week to springboard 10.0 Bcf/d higher” week/week. Additionally, a “seasonal progression towards colder temperatures” before mid-December, could drive gas demand “another 8.5 Bcf/d higher next week.”

NatGasWeather Sees More Demand for Spot Gas

“A weather system with rain and snow will track across the eastern U.S. the next few days with frosty lows of 10s to 30s and highs of 30s to 50s,” NatGasWeather said Monday. “Temperatures will also be cool across the South and Southeast with lows of 20s and 30s.”

“A second cold shot is forecast to push into the interior West and central United States, with lows of zeroes to 30s Wednesday and Thursday,” the forecaster said. While the eastern United States is expected to warm back into 50s and 60s later this week, “another weather system is expected into the Southeast and then rest of the East” this weekend and early next week “to keep regionally stronger demand going.”

Daily Forecast

The price action on the charts indicates bottoming action as the market goes through the transition from bearish to bullish. November was the third warmest in the past 70 years so it may take a few days to shake out the bearish traders. Furthermore, they probably want to see confirmation of the cold weather in new forecasts throughout the week.

Our work indicates a support base may be forming. We’ll know more about its strength if $2.829 to $2.788 holds as support.

Taking out $3.002 will change the main trend to up, but sellers may be waiting at $3.082 to $3.182.

The true level for an acceleration to the upside appears to be $3.204.