Natural Gas Price Fundamental Daily Forecast – Temps Expected to Warm Back Above NormalAccording to data from the U.S. Commodity Futures Trading Commission, U.S. natural gas speculators boosted their net long positions for a fourth week in a row to their highest level in almost two months.
Natural gas prices are trading slightly better early Monday. The range is tight and volume is low with the price action confined to a major retracement zone. This suggests investor indecision and perhaps impending volatility. It also indicates that investors may just be waiting for the next weather report.
At 0850 GMT, March Natural Gas futures are trading $2.958, up $0.017 or +0.58%.
According to data from the U.S. Commodity Futures Trading Commission, U.S. natural gas speculators boosted their net long positions for a fourth week in a row to their highest level in almost two months, betting prices will rise as exports increase while inventories remain below normal levels for this time of year.
The data showed that speculators in four major New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE) markets added to their bullish bets by 69,658 contracts, the biggest weekly increase since September 2016, to 212,336 in the week to January 16.
That was the first speculative longs increased for four weeks in a row since April 2017.
According to Reuters data, that compares with a five-year (2013-2017) average speculative net long position of around 161,450. The biggest net long position was 456,475 in April 2013, while the biggest net short position was 166, 165 in November 2015.
The main range is $3.272 to $2.532. Its retracement zone is $2.902 to $2.989. This zone is controlling the price action. Trader reaction to this zone will determine whether the rally continues, or we see another short-term correction.
The short-term range suggests that $2.882 to $2.837 is a value zone. If the market is going to continue its higher-bottom, higher-top chart pattern then it must hold this zone.
As far as the weather is concerned, temperatures are expected to warm back above normal this week for several key demand areas. Therefore, national demand will be moderate.
Looking ahead to Thursday’s U.S. storage report, U.S. gas inventories are expected to fall 16 percent below the five-year average during the week-ended January 19. Keep in mind that there were only four trading days last week due to the U.S. Martin Luther King Jr. holiday last Monday.
Traders should also note that if the U.S. government shutdown extends to Thursday, the U.S. Energy Information Administration may not release its weekly storage report.