Natural Gas Price Fundamental Daily Forecast – Short-term Bullish Over $3.105, Bearish Under $3.083

U.S. natural gas futures broke sharply on Wednesday as investors continued to digest the weather’s impact on heating demand over the near-term. Traders also noted U.S. output hit a record daily high this week.

December Natural Gas futures settled at $3.082, down $0.053 or -1.69%.

According to Thomson Reuters, homes and businesses would use less gas next week than previously forecast. U.S. gas consumption was now projected to average 81.5 billion cubic feet per day (bcfd) next week, down from an earlier forecast of 82.8 bcfd. That is still up from this week’s forecast of 72.4 bcfd because the weather is expected to turn colder than normal during the first week of November.

U.S. gas exports, meanwhile, were expected to average 9.0 bcfd this week, up 76 percent from a year earlier, due primarily to rising shipments of liquefied natural gas, according to Reuters data.

Forecast

Thursday’s U.S. Energy Information Administration’s weekly storage report is expected to show utilities likely added a smaller-than-usual 65 bcf of gas into storage in the week to Oct. 20, which would leave the total amount of fuel in inventory about 1 percent below the five-year average for this time of year at around 3.7 trillion cubic feet (tcf).

That compares with an increase of 74 bcf during the same week a year earlier and the five-year average build of 75 bcf for the period.

The daily chart pattern indicates the natural gas futures market is still rangebound. On the upside, the major resistance is $3.183 to $3.223.

The current short-term range is $3.012 to $3.198. Its 50% to 61.8% retracement zone at $3.105 to $3.083 is currently being tested. Trader reaction to this zone will determine the short-term direction of the market on Thursday.