Natural Gas Price Fundamental Daily Forecast – Strong Momentum Could Lead to Change in Trend Over $3.198

Natural gas futures gapped higher on the opening on Monday and sustained the move throughout the session as investors reacted positively to a bullish shift in the weather forecasts that call for increased heating demand over the next two weeks.

December Natural Gas futures finished the session at $3.134, up 0.150 or +5.03%.

In addition to forecasts for more heating demand over the next couple of weeks than previously expected, some traders noted rising heating demand would prompt utilities to start pulling gas out of storage this week, about a week earlier than the five-year average for this time of year.

Thomson Reuters forecast U.S. gas consumption will rise to an average of 91.1 billion cubic feet day (bcfd) next week from 84.7 bcfd this week. That is up from Friday’s forecasts of 86.4 bcfd for next week and 83.8 bcfd this week due to projections for higher heating demand. Production in the lower 48 U.S. states set a daily record high of 76.1 bcfd over the weekend, which boost the 30-day average output to 74.3 bcfd, according to Reuters data.

Forecast

Monday’s price action not change the main trend to up, but it shift momentum to the upside.

The short-term range is $3.198 to $2.847. Its 50% to 61.8% retracement zone is $3.023 to $3.064. Crossing to the strong side of this zone means momentum is trending higher. This zone is now support.

The main range is $3.353 to $2.847. Its retracement zone at $3.100 to $3.160 is currently being tested. Overtaking this zone will solidify the shift in momentum. It will also put the market in a position to challenge the main top at $3.198. Taking out this top will change the main trend to up.

The daily chart indicates there is plenty of room to the upside over $3.198. If enough buyers come in to sustain the rally then traders will set their sights on the September 19 main top at $3.353.

Looking ahead to Thursday’s U.S. Energy Information Administration’s storage report, utilities likely added a smaller-than-usual 24 bcf of gas into storage in the week to November 3 in part because rising exports. This would leave stocks about 1.6 percent below the five-year average for this time of year.

That compares with an increase of 54 bcf during the same week a year earlier and the five-year average build of 45 bcf for the period.