Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $1.885 Sets the Near-Term Tone

Natural gas futures are edging lower at the mid-session on Monday after giving back earlier gains. Shortly after the opening, the market was underpinned by the prospect of a return to more seasonal temperatures by mid-February. Later in the session, there must have been a shift in the midday forecast because prices gave up the gains and turned lower for the day.

At 18:02 GMT, March natural gas futures are trading $1.830, down 0.0011 or -0.60%.

Weather Still Short-Term Bearish

Natural Gas Intelligence reported that Bespoke Weather Services noted the European dataset moved slightly colder over the weekend as the American model shifted to warmer, “bringing the two into very good agreement regarding total forecast demand through the middle of the month.”

Bespoke said, “We do see more ridging at times around Alaska in the medium range today, but the lack of any blocking whatsoever from the pole over to Greenland keeps any cold confined to the central/western states, with above normal temperatures persisting in the East.”

“This makes it difficult to get national demand any higher than near normal for a few days here and there, and means any weakening of the Alaska ridging would lead to the forecast right back warmer.”

Natural Gas Intelligence also reported that EBW Analytics Group similarly viewed the forecast changes over the weekend as “relatively modest.”

“Nationally, total gas-weighted heating degree days are finally projected to return to seasonal norms around Valentine’s Day, with a cold Northwest/warm Southeast pattern,” the EBW analysts said. “With support in place, the March contract could probe higher this morning. If weather model guidance trends warmer again, however, any gains could be quickly erased.”

Exports Fell Over Weekend

Natural Gas Intelligence reported that Genscape Inc. said U.S. pipeline exports to Mexico declined over the weekend, but the firm is looking for volumes to increase later this week.

“Exports fell to as low as 5.14 Bcf/d this weekend and are only up to 5.23 Bcf/d for today,” Genscape senior natural gas analysts Rick Margolin said. “Volumes are low due to the weekend, mild weather and today being Constitution Day, a national banking holiday. The bulk of the drops has been on South Texas pipes, though volumes out of West Texas, Arizona and California are also down.

“The conclusion of today’s holiday should compel volumes to climb back into the 5.5 Bcf/d range for the rest of the week. Volumes could move higher next week as a warm front moves across the country, potentially generating cooling loads.”

Daily Forecast

The minor range is $1.957 to $1.812. Its pivot at $1.885 is controlling the near-term direction of the market.

A sustained move under $1.885 could trigger a retest of $1.812. Taking out his level will indicate the selling pressure is getting stronger.

Overcoming $1.885 will signal the presence of buyers. This may eventually lead to a test of the gap at $1.963 to $1.977.