Natural Gas Price Fundamental Daily Forecast – Strengthens Over $3.239, Weakens Under $3.208

Natural gas futures are trading a little higher early Friday after yesterday’s storage data related sell-off. Traders are also watching the weather and production for clues on how to play this market following a volatile hurricane-driven rally earlier in the week.

At 1034 GMT, November Natural Gas futures are trading $3.263, up $0.041 or +1.27%.

On Thursday, the Energy Information Administration (EIA) reported a 90 Bcf injection into natural gas storage inventories for the week-ending October 5. The report was close to the target forecast with guesses clustered between high 80s Bcf to low 90s Bcf.

Last week’s EIA report featured a low miss. Yesterday’s was a high miss, so essentially the injections cancelled out each other. The big news, however, is that yesterday’s weakness suggests conditions have loosened up a little since hurricane fears subsided.

The fresh news is a little bearish. Potentially pressuring prices is the news that burns are beginning to loosen and production is continuing to grow. Furthermore, Canadian imports are expected to rise next week.

Although the market sold off on Thursday, the report actually came in below the 92 Bcf consensus so we may not see much of a follow-through to the downside today. This also makes the market vulnerable to the upside on any news regarding the return of cold weather, production issues because of the hurricane damage, and another day of lower Canadian imports.

However, the bears will be operating under the notion that longer-term warming patterns and yesterday’s storage news would add further pressure.

The daily chart indicates that traders will be watching a pivot price at $3.239. Trader reaction to this price should determine the direction of the market today.

Holding above $3.239 will signal the presence of buyers. A break below this level will indicate the return of sellers. A sustained move under $3.208 will indicate the selling is getting stronger.

A move through $3.368 will signal a resumption of the uptrend. The main trend will change to down on a trade through $3.109.