Natural Gas Price Fundamental Daily Forecast – Strong Possibility of Short-Covering Rally After $2.532 Target is Reached

Long liquidation continues to drive natural gas futures lower early Monday. The price action the last two weeks suggests speculators have thrown in the towel on a bull market this winter season.

At 1025 GMT, March Natural Gas futures are trading $2.569, down $0.015 or -0.54%.

The market is currently trading lower for the year and in a position to take out the December 21 main bottom at $2.532. If it does then means the entire winter season rally has been wiped out.

Natgasweather.com has updated its latest weather forecast for February 12 to February 18. “Cold air over the Rockies and Plains this weekend will spread across the Midwest and portions of the Northeast Monday through Tuesday for a bump in demand as lows reach -10F to 20s.

Rain and snow showers are expected over the East Coast Monday as a weak cool front sweeps through. However, milder conditions will gradually return across the South and East mid-week as high pressure strengthens to bring highs to 50s to 70s, easing national demand.

Several cold shots will push into the western and north-central U.S. this week, then into the Midwest and Northeast Friday – Saturday.

Demand this week will swing between moderate and high several times into next weekend.

Forecast

This week began with the market trading lower for a ninth consecutive session and in a position to challenge $2.532. The downside momentum suggests this price is an easy target and likely to fail as support.

At this point, we’re not sure if the selling will extend beyond this level or if it will be used to trigger sell stops and attract fresh sellers. In my opinion, it’ll be dangerous to initiate fresh shorts on a move through $2.532 because of the possibility of a closing price reversal bottom.

Mild weather and increasing production is behind the selling pressure. If there is a turnaround then it will likely be related to profit-taking and short-covering rather than a change in the fundamentals.