Natural Gas Price Fundamental Daily Forecast – Strengthens Over $2.691, Weakens Under $2.673

Technical factors could also influence the direction of the November natural gas futures contract on Wednesday. The market is straddling a key retracement level for a third session at $2.691. Trader reaction to this level will also determine the direction of the market today.
James Hyerczyk
Natural Gas

Natural gas futures are inching higher on Wednesday shortly after the regular session opening. The market is also trading inside yesterday’s range, which tends to indicate investor indecision and impending volatility. The price action is also suggests that traders are weighing late-session heat against the possibility of a large storage injection on Thursday.

At 12:13 GMT, November natural gas futures are trading $2.712, up $0.012 or +0.44%.

Short-Term Weather Outlook

According to NatGasWeather for September 18-24, “Unseasonably strong hot high pressure continues across Texas and the South with highs of 80s to 90s for strong late season demand. The exception will be along the Texas Coast as heavy tropical rains bring highs of mid-80s. The western and central US will be unsettled as weather systems bring showers and highs of mostly 60s and 70s with lows of 30s and 40s. The important corridor from Chicago to New York City will be comfortable with highs of 70s to 80 for light demand. Overall, national demand easing to lighter levels as southern US heat fades. Overall, national demand will be high across the southern US and low across the northern US, averaging out to moderate.”

Bespoke Weather Services (BWS) said, “…The balance data and continued strength in cash makes us feel there is more downside risk versus upside at these price levels. Higher wind may ease gas burns more, and a lot of rain in Southeast Texas” could take out “a chunk of demand in the Houston area the next couple of days. In addition, continued warmth will gradually evolve bearish as we move into the month of October.”

Storage Injections Potentially Bearish

Energy Aspects said its estimates show “stout” storage injections starting with the week ending September 27.

“While our forecasts for storage injections have shifted since mid- to late-August on the warmer forecast (and realized) weather, our projected end-October inventory is near 3.76 Tcf, not a level that should induce gas rationing nor point to anything that suggests tight fundamentals,” the firm said in a recent note.

Daily November Natural Gas

Daily Forecast

Technical factors could also influence the direction of the November natural gas futures contract on Wednesday.

Yesterday, sellers helped form a potentially bearish chart pattern. A trade through $2.673 will confirm the chart pattern and signal the start of a 2 to 3 day correction. A move through $2.745 will negate the chart pattern and signal a resumption of the uptrend.

The market is also straddling a key retracement level for a third session at $2.691. Trader reaction to this level will also determine the direction of the market today.

Finally, the main trend will change to down on a trade through $2.551. This could lead to an eventual test of the short-term retracement zone at $2.440 to $2.368.

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