Natural Gas Price Fundamental Daily Forecast – Short-term Weather Concerns Could Drive Price to $2.886

After early session weakness, natural gas futures rallied to close higher, as traders mulled the likely impact on demand from new weather forecasts. Natural gas prices were also helped by a rally in the expiring January natural gas futures contract.

On Wednesday, February natural gas futures settled at $2.732, up 0.078 or 2.94%.

The short-term weather forecasts are calling for dwindling areas of colder weather, implying diminishing support for heating-related demand.

Offsetting this news, however, are National Weather Service (NWS) 6-10 day forecasts showing the country split between below-average temperatures over nearly the entire eastern two-thirds of the U.S. and above-average temperatures over much of the West, separated by a narrow band of temperatures over a few areas of the Rockies into fringes of Texas.

Further out to the 8-14 day period, temperatures over a large area of the central U.S. and the edges of the Southeast show moderate to average readings, shrinking the scope of below-average temperatures to the eastern third of the U.S. and parts of the Gulf Coast. Above-average temperatures overtake almost all of the West and patches of the Midwest and Gulf Coast.

Forecast

February Natural Gas is trading higher early Thursday. At 0700 GMT, the futures contract is at $2.779, up $0.047 or +1.72%.

Technically, the market is in a strong position to resume the developing short-term rally that was interrupted by Tuesday’s weakness. A trade through $2.789 will change the main trend to up according to the daily swing chart.

The main range is $3.210 to $2.562. If a change in trend generates enough upside momentum, we could see a short-term surge into its retracement zone at $2.886 to $2.962.

Today’s U.S. Energy information Administration’s weekly storage report is expected to show a draw of about 115 billion. Last week, the draw was 182 billion.