Natural Gas Price Fundamental Daily Forecast – Supported by Cooler Outlook for Mid-November

Natural gas futures are edging higher for a second session on Wednesday after new forecasts called for colder temperatures at the end of the month. Improving LNG feed gas demand and a successful test of a key support area earlier in the week are also helping to generate some upside pressure.

At 14:01 GMT, December natural gas is trading $5.666, up $0.124 or +2.24%.

Short-Term Weather Forecast

According to NatGasWeather for November 3-9, “A chilly weather system continues across the Midwest and Northeast with highs of 40s to 60s, lows of 20s-30s, including areas of rain and lows over the Southern Plains into Northern Texas, aiding strong national demand.

Mild weather systems will continue into the West with highs of 50s and 60s. The far southern U.S. will be comfortable with highs of 60s to 80s.

National demand will ease to light levels this weekend into next week as high pressure with comfortable highs of 50s to 70s expands across over most of the U.S. besides the slightly cool Northwest.”

NatGasWeather also added in their Wednesday forecast, “There’s increasing potential for a relative chilly weather system to exit the West late next week, initially tracking across the Midwest, then into the East the following weekend (Nov 13-16) for closer to seasonal demand. This is where the GFS model is a little cooler than the EC.”

Early Look at EIA Government Storage Report

Thursday’s Energy Information Administration (EIA) storage report for the week-ended October 29 is expected to show another sizable injection. Natural Gas Intelligence (NGI) forecast a build of 68 Bcf for this week’s EIA report. That would easily exceed both the year-earlier injection of 27 Bcf and the five-year average 38 Bcf build. Energy Aspects issued a preliminary estimate of 66 Bcf for the upcoming report.

Daily Forecast

Technically, the market found support inside a major retracement area at $5.269 to $4.956. This zone is controlling the near-term direction of the market.

The market is currently testing a minor retracement zone at $5.514 to $5.652. Overcoming it should drive December natural gas futures into the key retracement zone at $5.832 to $6.011. Trader reaction to this zone will tell us if the bulls or bears are in control.

Despite this week’s expected storage build, according to EBW analysts, the arrival of winter conditions over the northern part of the country this month could abruptly shift the market to withdrawal season and support higher prices.