Natural Gas Price Fundamental Daily Forecast – Supported by Strong Cash Market, Mixed Forecasts

Natural gas futures are trading slightly higher on Tuesday as investors continue to digest the latest forecasts calling for cooler temperatures in several key demand areas later in the week. Professional traders probably don’t believe the current two-day rally following Friday’s technical reversal bottom will lead to a prolonged rally or even a change in trend, however, it may be significant enough to raise cash prices over the near-term and spook a few of the weaker shorts out of the market.

At 10:17 GMT, May natural gas futures are trading $2.712, up 0.004 or +0.15%.

Rising cash market prices helped drag up futures prices on Monday. This surprised some short sellers who were banking on weaker prices due to the forecasts calling for mild to warm conditions to cover most of the United States early this week. However, the current strength may be coming from forecasts for later in the week that are predicting cooler conditions from Wednesday through Sunday.

Short-term Weather Outlook

According to NatGasWeather, “The next couple days will be very comfortable for most of the US besides the far northern US. With highs of 70s and 80s, including 70s to Chicago, national demand will be much lighter than normal Monday –Tuesday. Stronger cooling will spread across the northern and central US Saturday to Tuesday with lows of 20s and 30s for stronger national demand. Overall, national demand will be low to very low through Tuesday, then increasing to moderate to high.”

Additionally, “The coming pattern is still expected to be quite active going into late April with periods of cooler than normal conditions across the western, central, and northern US, just with the weekend data not quite as cold with a weather system next weekend and also better locking onto a mild break between cool shots across the Great Lakes/Ohio Valley and East April 16^th and 18^th.”

Daily Forecast

The trend is down, but the weather forecast may contain just enough calls for cooler temperatures to underpin prices over the near-term.

Technical factors are also playing a role in the price action with the market currently testing a 50% to 61.8% retracement zone at $2.709 to $2.745. Another potential retracement zone target is $2.764 to $2.796.

If the upside momentum continues then the best target will be $2.745 to $2.764. Since the main trend is down, sellers are likely to return if this area is tested.

Basically, don’t expect a change in trend to the upside, but be prepared for some short-term short-covering. Furthermore, if you want to trade the trend then wait for a test of a key value area before re-establishing a new short position.