Natural Gas Price Fundamental Daily Forecast – The Late Start to Winter Puts Short-Sellers in Control

Natural gas futures are edging lower late in the session on Friday as hopes for a rally faded following yesterday’s gains. The selling pressure was primarily driven by the delayed onset of winter and weak cash pricing.

At 21:02 GMT, January natural gas futures are trading $4.895, down $0.350 or -6.67%.

Steep price discounts in the cash market were part of larger sell-off across the country, where Henry Hub December prices were dragged lower by a bearish weather outlook, stronger production and inconsistent feed gas demand by U.S. liquefied natural gas (LFG) facilities, according to Natural Gas Intelligence (NGI).

It’s November 12 and market participants are still waiting for the onset of winter, or even a hint of winter in the forecasts.

Bespoke Weather Services said there continued to be modest fluctuations in the models, but the 11- to 15-day outlook was still unclear. Instead, the weather data tends to only “keep things variable.” Any persistent anomalies in the data are warm ones out in the West, Bespoke said, “Where of course there are fewer people, so less significance to natural gas markets.”

US Energy Information Administration Weekly Storage Report

The EIA reported on Wednesday that domestic supplies of natural gas rose by 7 billion cubic feet for the week-ended November 5. That was less than half the average increase of 15 billion cubic feet forecast by analysts polled by S&P Global Platts. The government released its report a day early because of Thursday’s Veterans Day holiday.

Total stocks now stand at 3.618 trillion cubic feet (Tcf), down 308 Bcf from a year ago and 119 Bcf below the five-year average, the government said.

Short-Term Outlook

The key level to watch over the short-run is $5.024. Friday’s close under this level indicates the short-sellers are in control. The daily chart even shows there is no major support until $4.009. This creates the possibility of a weak market next week or even a gap-lower opening Monday morning.