Natural Gas Price Fundamental Daily Forecast – Shift in Forecast Should Lead to Pullback into $2.905 to $2.867

Natural gas futures are trading nearly flat on Friday as investors await the release of the latest storage data from the U.S. government. Traders are also continuing to react to a change in the 8 to 14 day forecast which suggests the recently forecast cold front may be weakening.

At 1243 GMT, November Natural Gas futures are trading $2.990, up $0.010 or +0.34%.

According to NatGasWeather.com for the September 27 to October 3 period, “High pressure will dominate the West and Southeast with highs of 80s and 90s. A cool front extends from the east-central U.S. to the South, with heavy showers. A stronger cool front will push into the north-central U.S. the next few days with lows of 30s and 40s, locally 20s. Much of the U.S. will return above normal next week with highs of 80s to lower 90s over the southern U.S. and upper 60s to lower 80s across the northern U.S. Locally cooler exceptions next week will be near the Canadian border. Overall, demand will be moderate, then low next week.

Forecast

The longer-term uptrend is expected to remain intact despite expectations of near-term selling pressure due to a rapidly changing weather pattern.

As of this morning, the market is back to last Friday’s close which means the entire weather premium from earlier this week has been erased from the charts.

If the selling pressure continues then we could see an eventual move into a support zone at $2.905 to $2.867. Since the main trend is up, buyers are likely to return on a test of this zone since it represents value.

Essentially, at this time of the year without the emergence of cold temperatures earlier than expected, natural gas is likely to remain rangebound for another few weeks or so.

Today’s U.S. Energy Information Administration’s (EIA) weekly storage report is expected to show a build of 64 Bcf. This figure will be well-below last week’s 86 Bcf injection. It also assures that the current storage deficit will widen, which will be supportive over the longer-term.

I don’t expect the EIA report to have much of an impact on prices today unless it misses to the downside. Traders are watching the weather at this time. Furthermore, if downside momentum continues, we’re expecting a near-term break into at least $2.905 to $2.867. This is likely to offer the next buying opportunity.