Natural Gas Price Fundamental Daily Forecast – Short-Covering Driving Market Away from Value Zone at $2.929 to $2.886

Natural gas futures are trading sharply higher early Monday and rapidly approaching last week’s high at $3.111. The price action suggests there may be something cooking in the 8 to 14 day weather outlook that has spooked short-sellers into abandoning their positions established late last week following the release of the lower-than-expected injection into the storage during the week-ending September 21.

At 1207 GMT, November Natural Gas futures are trading $3.070, up 0.062 or +2.09%.

Short-Term Weather Outlook

NatGasWeather.com for Monday, October1, says, “Much of the country east of the Plains will be warmer than normal this week with highs of 80 to lower 90s across the southern U.S., with upper 60s to lower 80s over the Ohio Valley and Mid-Atlantic, including portions of the Northeast. Locally cooler conditions can be found near the Canadian border due to weak cool fronts. The West will cool this week, but still mostly comfortable with highs of 60s and 70s. The Southwest will be wet the next several days as tropical cyclone Ross tracks inland, easing hot conditions. Overall, demand will be light to moderate the next 7 days.

Mid-Term Weather Outlook

For October 1 to October 7, NatGasWeather.com says, “The West will see numerous weather systems bring showers but with mostly mild to only slightly cool conditions. Heavy rains are expected into the Southwest as tropical moisture from Rosa arrives. The southern U.S. will be very warm with highs of 80s to lower 90s. The East will be mild to warm with highs of 60s to lower 80s due to strong high pressure, although with cooler exceptions near the Canadian border as weather systems provide glancing blows. Overall, a mostly comfortable early October pattern with light to moderate demand.”

Forecast

Today’s early price action makes it genuinely tough for traders. In my opinion, it’s a little too early in the season to chase the market higher, especially the one that being driven by the spot market. The moves are generally too fast and short in duration.

Furthermore, chasing a market higher at this time of year leaves you with no out because a pullback below support will be looked at as a buying opportunity just as one who bought strength will be bailing out.

Given the current main range of $2.747 to $3.111, the best buying opportunity remains its retracement zone at $2.929 to $2.886.

We’re comfortable with the notion of a potential bull market this year due to the expected supply shortage. However, we’re not in favor of chasing a news driven rally at this time.