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James Hyerczyk
Natural Gas
Natural Gas

Natural gas prices are trading lower on Monday as traders continue to react to the uncertainty over the 7 to 10 day forecasts. The current weeklong consolidation chart pattern suggests investor indecision and impending volatility. Traders seem to be waiting for a catalyst to trigger the next move. Will it be an acceleration to the upside or to the downside? That will be determined by the duration of the cold snap that is expected to strike around January 4 to January 7.

At 1110 GMT, February natural gas futures are trading $3.688, down $0.062 or -1.65%.

February Natural Gas

Technical Factors Coming into Play

The main range is $3.111 to $4.849. Its retracement zone is $3.775 to $3.980. This zone and especially $3.775 is resistance. This level has essentially stopped the market five sessions in a row. Unless buyers can overcome this price, the market is likely to drift sideways-to-lower over the near-term.

Overcoming and sustaining a rally over $3.775 will be the first sign of strength. If this move can generate enough upside momentum then look for an acceleration into $3.980. This is another trigger point for a surge into $4.141 to $4.308.

Simply stated, based on the short-term range, look for an upside bias to develop on a sustained move over $3.821. Look for the downside bias to continue on a sustained move under $3.433.

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Short-Term Weather Outlook

According to NatGasWeather for the period December 24-30, “A weak cool front with light snow showers will sweep across the Great Lakes and Northeast Christmas Eve & Christmas Day, followed by rapid warming for the second half of the week where highs will reach the 40s and 50s. A stronger weather system will bring rain and snow to the West the next few days, then tracking into the central US and Texas Wednesday to Friday, then finally into the East next weekend. The South, Southeast, & up the Mid-Atlantic Coast will be mild to warm with highs of 50s to 70s. Overall, national demand will be low until next weekend.”

Forecast

Look for a sideways to lower drift on extremely low volume unless the weather forecast puts cold weather into the picture after January 4.

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