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Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $1.957 Sets the Tone

By:
James Hyerczyk
Updated: Jan 28, 2020, 14:43 UTC

The market is still ripe for a massive short-squeeze.

Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $1.957 Sets the Tone

Natural gas futures are trading higher on Tuesday as the market continues to consolidate following last week’s plunge to the multi-year low of $1.862. The market is being supported early in the session by mixed trends in the latest weather forecasts. However, absent from the guidance are forecasts calling for colder temperatures during the second week of February. This projection propped up prices on Monday.

At 13:55 GMT, March natural gas futures are trading $1.899, up $0.021 or +1.06%.

Short-Term Weather Outlook

According to NatGasWeather for January 28 to February 3, “Several weather systems will impact the US this week, although none frigid. One system will exit the Northeast today, another will exit the Southeast, while new ones will push into the West and South-Central US/Texas.”

“Additional mild to cool systems will track across the country this weekend and early next week. Overall, highs will be in the 30s to 50s across the northern US, locally 20s, with 50s to 70s across the southern US. With frigid air retreating into Canada the next 7-days, national demand will be lighter than normal.”

Net Shorts Rise

According to the CFTC Commitments of Traders report for the week ended January 21, net shorts for natural gas futures rose 10, 223 contracts to 249,405 contracts for the week.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas fell by 92 billion cubic feet for the week-ended January 17. That was slightly larger than the decline of 88 billion cubic feet consensus forecast.

Total stocks now stand at 2.947 trillion cubic feet, up 554 billion cubic feet from a year ago, and 251 billion cubic feet above the five-year average, the government said.

Daily March Natural Gas

Daily Forecast

With the weather forecasts inconclusive, we’ll turn to the chart pattern for guidance.

The minor range is $1.862 to $1.957. Its 50% level at $1.910 is controlling the price action early Tuesday.

Crossing to the strong side of the pivot will indicate the presence of buyers. Taking out $1.957 will change the minor trend to up. This could trigger an acceleration into $2.033.

A sustained move under $1.1910 will signal that sellers are still coming in to prevent a rally. This could lead to a retest of $1.862.

The market is still ripe for a massive short-squeeze.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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