Natural Gas Price Fundamental Daily Forecast – Rally into $2.749 to $2.792 Will Set Up Next Shorting Opportunity

Natural gas futures are trading higher shortly ahead of the regular session opening on Wednesday amid forecasts calling for cold temperatures at the end of February to extend into early March. Traders appear to be discounting the return of milder temperatures next week. Higher spot markets on Tuesday also helped underpin prices late Tuesday.

At 11:39 GMT, April natural gas futures are trading $2.702, up $0.005 or +0.19%.

Short-Term Weather Outlook

According to NatGasWeather for February 20-26, “A cold blast will impact the Great Lakes, Ohio Valley, and Northeast into Wednesday, with low -0s to 20s for strong demand. Showers and cooling will sweep across Northern Texas and the South with lows of 20s and 30s, aided by a weather system bringing showers over Texas. The West will be cool to cold as weather systems track through. Mild high pressure will build across the South & East Thursday-Sunday with highs of 50s to 80s, warmest over the South & Southeast. Overall, national demand will be high through Wednesday, then easing towards moderate late in the week through the coming weekend.”

Mid-Term Weather Outlook

“The U.S. National Weather Service calls for lower-than-normal temperatures across much of the U.S. over the next two weeks, which may result in an upward push in heating demand and, in turn, some heavy drawdown from storage,” according to S&P Platts.

EIA Storage Data

Total stocks now stand at 1.882 trillion cubic feet, down 30 billion cubic feet from a year ago and 333 billion below the five-year average, the government report showed.

Daily Forecast

Technically, the main trend is down. However, momentum is starting to shift to the upside. The short-term range is $2.565 to $2.730. Its 50% level or pivot is $2.648. Holding above this level is helping to generate an early upside bias today. If this can create enough upside momentum today then look for a drive into the minor top at $2.730. Taking out this top will change the minor trend to up. This could fuel a rally into $2.749 to $2.792 over the near-term.

Short-covering is driving the market higher. The weather pattern is scaring some of the weaker shorts out of the market. The major players are not likely to be shaken by the current price action or the weather forecasts. They are likely to treat this rally as another shorting opportunity. Since the main trend is down, look for sellers to show up on a test of $2.479 to $2.792.