Natural Gas Price Fundamental Daily Forecast – Sellers Pressing $3.870 Amid Milder 10-15 Day Outlook
Natural gas futures are trading flat on Wednesday after recovering from early session weakness, however, sentiment remains weak following Tuesday bearish performance. After a promising start to the session, prices retreated into the close after the latest forecasts showed more seasonal weather ahead.
At 08:49 GMT, October natural gas is trading $3.908, down $0.008 or -0.20%.
Although temperatures into the weekend are expected to set seasonal records in some areas of the country, natural gas futures traders are showing little reaction to the news. This is because their outlook is typically 10 to 15 days ahead. Those forecasts are calling for the weather pattern to shift closer to normal.
Meanwhile, spot gas prices continued to strengthen amid widespread heat and humidity across the country. Natural Gas Intelligence’s (NGI) Spot Gas National Average rose 6.5 cents to $3.995.
Demand Warnings Issued in Certain Areas
“In summary, it will be an all-hands-on-deck environment the next couple of days in the U.S. power markets,” Mobius analysts said. “As a result, the call on natural gas in the power sector may be decidedly nonlinear over the next 24-48 hours.”
Remember that this is a spot market issue. Although the futures markets may be underpinned, by the heat-related headlines, futures traders are already focusing on the September 4-9 time frame.
NatGasWeather Outlook Suggests Gains Will Be Capped
According to NatGasWeather for August 25-31, “Strong high pressure continues across the central, southern and eastern U.S. with very warm to hot highs of upper 80s to 100s, hottest from Texas and the Southwest with mid-90s-100s. The Northwest and Upper Midwest will be comfortable with highs of 70s to 80s as weather systems bring scattered showers.
Hot upper high pressure will weaken next week with comfortable highs of 70s and 80s over the northern and eastern U.S., but still very warm to hot over the southern U.S. with highs of mid-80s to 90s, besides tropical rains likely over Florida or Louisiana. Overall, national demand will be high through the weekend, then easing.”
The short-term range is $4.211 to $3.751. Its 50% to 61.8% retracement zone is resistance. This area stopped the rally on Tuesday at $3.989.
The minor range is $3.751 to $3.989. Its 50% level at $3.870 is the next downside target and potential support. This level is also a potential trigger point for an acceleration to the downside with $3.751 the next major target.