Natural Gas Price Fundamental Daily Forecast – Slight Upside Bias on Sustained Move Over $4.557

The short-term forecast is inconsistent enough to hold prices in a range, but the new forecast for January, calling for colder temperatures, could be what’s fueling the slight upside bias.
James Hyerczyk
Natural Gas
Natural Gas

Natural gas futures are trading higher on Wednesday for a second day after Monday’s steep break. Traders are trying to claw back to break-even for the week. The price action is actually a reflection of the concerns over the inconsistent weather forecasts and uncertainty ahead of this week’s U.S. Energy Information Administration’s weekly storage report.

At 1031 GMT, January Natural gas futures are trading $4.590, up 0.132 or +2.94%.

Concerns over the return of cold weather over the short-term is helping to support prices. However, the small changes in the forecast have been only enough to fuel a mildly bullish reaction. Strengthening spot gas prices in high demand areas are also helping to underpin the market.

The NatGasWeather forecasters are saying, “There haven’t been recent colder trends to justify today’s (Tuesday’s) move higher, just like there weren’t strong milder trends to justify yesterday’s (Monday’s) move lower.”

The weather service also made no changes to its short-term forecast. They are still saying that a series of cold shots was still on track to impact much of the country the rest of this week and into early next week for strong national demand. They also continued to say that mild high pressure was expected to follow, however, covering much of the northern and eastern United States December 12-17 and likely longer as the market waits on better potential for cold shots out of Canada to return to the northern United States.

The problem with the forecast is that the data still has revealed when the cold shots from Canada will arrive. “The longer it takes, the longer bearish weather sentiment will reign after the current series of cold blasts ends,” NatGasWeather said.

Additionally, helping to keep a lid on prices is bearish sentiment that is being generated by rising production data. According to Genscape, production has jumped more than 1 Bcf/d since last Monday (November 26). On Friday, the firm said production had topped the 87 Bcf/d mark.

Forecast

The short-term forecast is inconsistent enough to hold prices in a range, but the new forecast for January, calling for colder temperatures, could be what’s fueling the slight upside bias.

The chart pattern continues to indicate the presence of buyers on a sustained move over $4.557. A move under $4.431 will signal the return of sellers.

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