Natural Gas Price Fundamental Daily Forecast – Seasonal Buying Encouraging Short-Covering

The current rally is mostly technical in nature. If the short-sellers continue to cover, October natural gas could breakout out over a technical level at $2.332 and a main top at 2.338. The daily chart is wide open over these levels with the next main top coming in at $2.510.
James Hyerczyk
Natural Gas

Natural gas futures are edging higher on Tuesday. In my opinion, the price action reflects short-covering related to last week’s rollover from the September futures contract to the October futures contract. The futures contract went off the board with a record number of shorts. Traders had to decide whether to rollover their shorts into the October futures contract and attempt to continue to press the market lower, or reduce their positions ahead of seasonal buying.

At 06:25 GMT, October natural gas futures are trading $2.320, up $0.035 or +1.53%.

Hurricane Dorian is having no impact on the rally. It is nowhere near the natural gas production facilities in the Gulf of Mexico near Louisiana and Texas. Furthermore, it could actually lead to lower cooling demand in Florida, Georgia and the Carolinas if it takes out electrical power.

The two other tropical disturbances near Mexico and off the coast of West Africa are also not influencing the price action in the futures market although they are being watched.

Daily October Natural Gas

Short-Term Weather Outlook

According to NatGasWeather for August 30 to September 6, “Comfortable conditions will continue across the Midwest, Northeast, and Mid-Atlantic with highs of upper 60s to lower 80s for light demand. The West into Texas will be hot with highs of 90s and 100s as high pressure rules for strong regional demand. Hurricane Dorian will bring rains to Florida and portions of the Southeast Sunday through Tuesday, while high pressure will expand across much of the rest of the country for a minor bump in national demand. However, the northern and eastern US will cool back to the comfortable 70s late in the week. Overall, national demand will be moderate, increasing to high Monday to Wednesday.”

U.S. Energy Information Administration Weekly Storage Report

The August 29 EIA report was bearish on paper, but that didn’t prevent the huge short-covering rally. The EIA reported a number that was on the high end of the estimates. The EIA reported a 60 Bcf injection but a few Bcf above the five-year average of 57 Bcf, according to the government.

Total working gas in storage as of August 23 stood at 2,857 Bcf, 363 Bcf higher than last year and 100 Bcf below the five-year average.

Daily Forecast

The current rally is mostly technical in nature. If the short-sellers continue to cover, October natural gas could breakout out over a technical level at $2.332 and a main top at 2.338. The daily chart is wide open over these levels with the next main top coming in at $2.510.

On the downside, the key support is $2.278. If this level fails then look for the selling to possibly extend into $2.226 to $2.191.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.