Natural Gas Price Fundamental Daily Forecast – Strengthens Over $2.911, Weakens Under $2.880

There is no question that the winter heating season will begin with a supply deficit. This is helping to underpin the market. In the meantime, the market is going to continue to adjust to reports of increased production and weaker demand due to the return of more seasonal temperatures. The EIA’s weekly storage report is expected to show a build of 81 Bcf for the week-ending September 20. This will be up from last week’s 69 Bcf build.
James Hyerczyk
Natural Gas
Natural Gas

Natural gas futures are trading higher shortly before the regular session opening and today’s U.S. Energy Information Administration weekly storage report. Although prices jumped earlier in the week on a bullish combination of increased demand and a drop in production, traders don’t expect these trading conditions to continue over the near-term and are anticipating a sideways-to-lower trade.

At 1203 GMT, November Natural Gas futures are trading $2.899, up $0.017 or +0.59%.

Weather

According to NatGasWeather.com for the September 20 to September 26 period, “High pressure will dominate much of the U.S. today and Friday with highs of 80s and 90s over the southern U.S. and 70s and 80s over the northern U.S. Cooler exceptions will be across the Northwest & North Plains where a weather system is tracking through. Weak weather systems will impact the far northern U.S. this weekend, while remaining warmer than normal over the rest of the country, but not quite as hot as currently across the southern U.S. High pressure will strengthen across the southeastern U.S. next week, but with stronger cool shots in the Northern Plains. Overall, demand will be a little stronger than normal Thursday through Friday, then moderate this weekend.

Weekly Storage Report

The EIA’s weekly storage report is expected to show a build of 81 Bcf for the week-ending September 20. This will be up from last week’s 69 Bcf build.

Forecast

Technical factors will also influence the direction of the November Natural Gas market today. The main range is $3.013 to $2.747. Currently, the market is trading inside its retracement zone at $2.880 to $2.911. Trader reaction to this zone will determine the near-term direction of the market. The market is currently trading inside this zone.

The price action this week indicates that traders may have found the sweet spot in the market, or a balanced area….not too bullish, not too bearish.

There is no question that the winter heating season will begin with a supply deficit. This is helping to underpin the market. In the meantime, the market is going to continue to adjust to reports of increased production and weaker demand due to the return of more seasonal temperatures.

Basically, we could build a case for an upside bias if buyers can sustain a rally over $2.911. However, look for a downside bias to develop on a sustained move under $2.880.

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