Natural Gas Price Fundamental Daily Forecast – Short-Term Heat Could Drive Prices Through $2.308

Natural gas prices are trading higher shortly after the opening on Tuesday after posting a decent technical bounce from a successful test of support the previous session. Our analysis on Monday said the short-term range is $2.134 to $2.364. This gave us a target zone of $2.249 to $2.222.

Buyers came in at $2.217 suggesting a secondary higher bottom was forming. When a market is going through a transition period of extremely bearish to somewhat bullish, the first rally is usually massive short-covering. Smart speculative buyers don’t typically chase markets higher, they wait for pullbacks into support. This is what may have happened on Monday so my bias has started to shift to the upside.

Overcoming $2.308 today will be another sign that the buying is getting stronger. The trend will change to up on a trade through $2.364. This could trigger an acceleration into $2.413 to $2.440.

At 12:32 GMT, August natural gas is trading $2.293, up $0.025 or +1.15%.

Short-Term (6 to 10 Day) Weather Forecast

According to NatGasWeather for July 2 to July 8, “A hot US pattern through Saturday with highs of upper 80s to lower 90s from the Great Lakes to the Northeast, including Chicago and New York City. The Southwest will be hottest with highs into the 100s, although the nation’s strongest demand will be across the Southeast and Mid-Atlantic Coast as highs reach the mid-90s, while combining with high humidities to push the Heat Index into the 100s. The Northwest & North Plains will be mostly comfortable with highs of upper 70s to 80s. Demand will ease early next week as cooling arrives across the Midwest. Overall, demand will be high through Saturday, then easing to moderate.”

U.S. Energy Information Administration Weekly Storage Report

Working gas in storage was 2,301 Bcf as of Friday, June 21, 2019, according to EIA estimates. This represents a net increase of 98 Bcf from the previous week. Stocks were 236 Bcf higher than last year at this time and 171 Bcf below the five-year average of 2.472 Bcf. At 2,301 Bcf, total working gas is within the five year historical range.

Daily Forecast

There’s heat in the forecast, but as long as El Nino is in effect, the heat is going to have a hard time locking in. Nonetheless, there is room to the upside according to the daily chart.

Yesterday’s late short-covering rally indicates that the key support is $2.222. Holding this level combined with a somewhat short-term bullish weather forecast could create the momentum needed to drive prices through $2.308. We could even see an acceleration into the main top at $2.364. The trend will change to up on a move through this level.