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Natural Gas Price Fundamental Daily Forecast – Price Action Indicates Bearish Investors Reluctant to Press Market Lower

Keep an eye on yesterday’s close at $2.707. Overcoming this later today and closing higher will indicate the buying is greater than the selling at current price levels. Traders should also watch trader reaction to last week’s close at $2.724. Overcoming this level and sustaining the move will offer a similar signal. Although rising production and a breakup of the recent heat dome are potentially bearish, the price action suggests this may have been priced into the market.
James Hyerczyk
Natural Gas
Natural Gas

Natural gas futures are trading slightly lower shortly after the cash market opening. Sellers are trying for a second session to decisively clear the previous bottom at $2.711 on the downside, but the price action suggests traders may be a little reluctant to short heavily at current price levels.

At 1324 GMT, September Natural Gas futures are trading $2.705, down $0.002 or -0.07%.

The market is currently at an inflection point on the chart. If the sellers can successfully press prices through $2.711 then look for a potential acceleration into a pair of bottoms at $2.674 and $2.673. The area is also a potential trigger point for an even steeper decline into the December 2017 bottom at $2.592. At the same time, traders should watch for a possible short-covering rally due to position-squaring ahead of Thursday’s government report.

According to NatGasWeather.com for the period of July 14 to July 23, “A weather system with showers and cooling will sweep across the Midwest and east-central U.S. the next few days with highs dropping into the 70s to lower 80s. Hot high pressure will dominate the rest of the country with highs mainly in the 90s to 110F, hottest from California to Texas for strong demand. Warming will briefly push into the East Friday to Saturday, although with a new system with showers and cooling arriving into the Midwest. Overall, demand will ease to moderate the next few days then back to high on Friday and Saturday.”

Forecast

Although rising production and a breakup of the recent heat dome are potentially bearish, the price action suggests this may have been priced into the market. Even with hot weather returning, the weather pattern is just not impressive enough to encourage short-covering or aggressive buying. At the same time, however, it’s not really causing bearish traders to aggressively short the market at current price levels either. This suggests a possible consolidation, or at least a lower, drifting trade, rather than another steep break.

Even with the downtrend, we’re not going to suggest pressing the market further too aggressively at current price level. We’re also more inclined to look for signs of short-term bottoming action such as a technical reversal.

Keep an eye on yesterday’s close at $2.707. Overcoming this later today and closing higher will indicate the buying is greater than the selling at current price levels. Traders should also watch trader reaction to last week’s close at $2.724. Overcoming this level and sustaining the move will offer a similar signal.

This week seems to be more about the price action than the bearish fundamentals.

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