Natural Gas Price Fundamental Daily Forecast – Tight Range as Traders Await Midday Weather Update

The cold weather is coming, but the price action suggests traders are ready for it. Furthermore, we’re looking at a series of 2 to 3 day cold shots, not a long-term cold system or Arctic Dome situation. Volatility could hit the market when the midday update is released.
James Hyerczyk
Natural Gas

Natural gas futures are trading flat-to-lower early Monday on low volume as most traders have taken to the sidelines ahead of today’s mid-day weather update. Three consecutive days of sideways price action is being caused by the U.S. and European weather models that remain at odds over long-term cold.

Speculative bulls are also getting little help from spot gas prices that are trading “lower as comfortable temperatures were projected to keep demand light through the early part of the week ahead,” according to Natural Gas Intelligence.

At 06:48 GMT, December Natural Gas futures are trading $2.514, down $0.003 or -0.12%.

Short-Term Weather Outlook

According to NatGasWeather for October 21 to October 27, “What was once a tropical system is now just showers exiting the Northeast. The rest of the southern and eastern US will be quite comfortable the next few days with highs of 60s to 80s. However, a strong weather system and associated cold shot is currently advancing into the northern and central US after bringing stronger demand for heating as lows drop into the 20s & 30s. This system will slowly reach the East Wednesday but weakening upon arrival. A break between cold shots is expected next weekend over the South & East ahead of an even colder system upstream over the Rockies/North Plains. Overall, moderate demand, increasing to high as the week progresses.”

Mid-Term Weather Outlook

The first cold shot is slated for Wednesday (Oct. 23) through next Saturday (Oct. 26), with potentially a brief break Oct. 27-28, according to NatGasWeather.

“This first cold shot will drop lows into the 20s and 30s across the Midwest and Northeast, locally colder, but the more ominous one is expected October 29-November 2 and where lows are more likely to dip into the teens to 30s for widespread stronger-than-normal demand,” the firm said.

“The latest GFS (American Model) also suggested cold would last into November 3-4,” NatGasWeather said. It does, however, see risks for a few Heating Degree Days (HDDs) to be lost for the last week of October, “but with the potential for cold lasting longer into the first several days of November.”

U.S. Energy Information Administration

On Thursday, the EIA reported a 104 Bcf injection into natural gas storage inventories for the week-ending October 11, marking the third time in four weeks that stocks have risen by at least 100 Bcf. Traders were expecting a triple-digit build and the actual number fell inside the expected range.

Last year’s EIA report came in at 82 Bcf. The five-year average injection is 81 Bcf.

Total working gas in storage ended the period at 3,519 Bcf, 494 Bcf above year-ago levels and 14 Bcf above the five-year average.

Daily December Natural Gas

Daily Forecast

The cold weather is coming, but the price action suggests traders are ready for it. Furthermore, we’re looking at a series of 2 to 3 day cold shots, not a long-term cold system or Arctic Dome situation.

Volatility could hit the market when the midday update is released.

If the forecast changes to more intense or longer periods of cold temperatures, then prices could spike higher. Taking out the two tops at $2.564 and $2.568, for example, could trigger an acceleration into the 50% level at $2.636.

If the forecast calls for more mild temperatures or a short-term duration of cold then look for a break under a technical pivot level at $2.478. If this creates enough downside momentum then look for the selling to possibly extend into the main bottom at $2.388.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.