Natural Gas Price Fundamental Daily Forecast – Short-covering Rally Targets $2.181 to $2.217The short-term range is $2.333 to $2.209. Its retracement zone at $2.181 to $2.217 is the primary upside target. Since the main trend is down, watch for sellers to reappear on a test of this zone.
Natural gas futures are inching higher shortly before the cash market opening on Wednesday. There is nothing major in the news to suggest the start of a short-term rally so we’re going to say that the move is being fueled by profit-taking and position-squaring ahead of Thursday’s weekly government storage report.
At 11:06 GMT, September natural gas is trading $2.126, up $0.015 or +0.71%.
Short-Term Weather Outlook
According to NatGasWeather for August 6 to August 12, “Hot high pressure will rule the western and southern US with highs of upper 80s to 100s, hottest over the Southwest & Texas. A weak weather system will impact the Midwest and East today, followed by a brief break mid-week before a stronger weather system and cool shot arrives late in the week. Highs across the Midwest and Northeast will be mostly comfortable and in the 70s and 80s. Overall, demand will be moderate across the northern US and high across the western and southern US, but not strong enough to intimidate.”
On Tuesday, NatGasWeather released its forecast for Thursday’s Energy Information Administration’s weekly inventories report. Their Machine Learning system based off GFS data predicts “a build in the upper 50s to near 60 Bcf for Thursday’s EIA weekly storage report. A build near 60 Bcf would be larger than the 5-year average of +43 Bcf, further improving deficits to near -100 Bcf after being a massive -720 Bcf just this past winter. “
The short-term range is $2.333 to $2.209. Its retracement zone at $2.181 to $2.217 is the primary upside target. Since the main trend is down, watch for sellers to reappear on a test of this zone.
Overtaking $2.217 will indicate the short-covering rally is getting stronger, but I don’t think short-sellers should be worried until buyers can take out $2.333 with conviction.
Still, given the fundamentals, a major rally is not likely to last and will likely set up the next short opportunity.