Natural Gas Price Fundamental Daily Forecast – Ripe for Short-Covering Rally

September Natural Gas futures are trading higher early Monday. There was on follow-through to the downside after last week’s steep sell-off. This suggests the market may be technically oversold especially since there has been no dramatic change in the weather pattern.

According to natgasweather.com, “During the middle of the week, hot high pressure will strengthen over the southern U.S. with increasing coverage of 90s, while weather systems continue across the North with highs of 70s and 80s. Overall, natural gas demand will be moderate”.

Today’s market is probably going to be determined by price action related to over sold conditions. This means it’s probably ripe for a meaningful short-covering rally.

I suspect that minor stop losses are sitting above $2.846. These are small speculative shorts. They are looking to protect profits while leaving open the possibility for further downside action. The major short-sellers have their buy stops slightly above $2.990, $3.101 and $3.114.

Taking out $2.846 will trigger a change in trend but this move is likely going to be met by more selling because this has been the pattern.

Although the market is ripe for a short-covering rally, I’m overall bearish on natural gas over the near-term. I don’t expect to see a meaningful rally develop until closer to the start of heating season. I may change my mind if the buying is strong enough to take out $3.114.