Natural Gas Price Fundamental Daily Forecast – Successful Defense of $2.954 Could Lead to Short-Covering Rally into $3.055

Natural gas prices rebounded after early session weakness as buyers stepped in to defend a pair of bottoms on the daily chart at $2.957 and $2.954. The move helped the market produce a potentially bullish technical chart pattern that could lead to a follow-through rally over the next 2 to 3 days.

November Natural Gas futures settled at $3.000, up 0.012 or +0.40%.

There were no major changes in the fundamentals and the weather forecast remained the same from the previous day.

The warm weather lingering over the Midwest and parts of the east are still expected to end by mid-week, which should be today. This is expected to lead to cooling late in the week.

In other news, according to the U.S. Energy Information Administration, total natural gas in storage currently stands at 3.408 trillion cubic feet. This is around 3.8% lower than levels at this time a year ago and in line with the five-year average for this time of year.

Forecast

Given the successful defense of the support levels at $2.957 and $2.954, traders may try the upside for a few days. However, any rally is likely to be labored because the buying is going to have to be strong enough to take out layers of technical resistance levels at $3.055, $3.086, $3.094 and $3.12 to have any shot at taking out the recent high at $3.214.

At this time of year, it is going to be difficult for the market to find enough buyers to drive the market through $3.122. I suspect the strongest resistance will come in at $3.086 to $3.094.

Prices may sit in a range until Thursday when the EIA releases its latest storage data for the week-ending September 22. This may be the first report to come in near average for this time of year since Hurricane Harvey hit the Texas Gulf Coast region the last week of August.

Traders are forecasting the storage report will show a build of about 66 billion cubic feet. That compares with a gain of 97 billion cubic feet in the preceding week, a build of 49 billion a year earlier and a five-year average rise of 84 billion cubic feet.

Natgasweather.com is predicting strong versus normal demand until Wednesday to Thursday, then easing to near normal/moderate.

We could see a technical retracement, but I don’t think the fundamentals support a strong rally or strong break at this time.