Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $2.766 Likely to Set the Tone Today

Natural gas futures are posting a two-sided trade early Monday with a slight bias to the downside as traders continue to try to figure out how to play the weather and the delay in the start of the injection season.

At 0845 GMT, June Natural Gas futures are trading $2.764, down $0.003 or -0.11%.

According to NatGasWeather.com for the period April 23 to April 29, “A mild weather system over the South will bring showers and thunderstorms the next few days, then gradually tracking into the East mid-week. A second, colder system will sweep across the Rockies Monday thru Tuesday and then into the South late in the week. Overall, most of the country will be mild/warm with highs of 60s to 80s, while cooler over the Rockies and Northern Plains with 40s and 50s. With mostly comfortable conditions this week, national demand will be near normal through Thursday, then slightly stronger this weekend due to cooling over the East.”

Forecast

We have no early projections for this Thursday’s U.S. Energy Information Administration’s weekly storage report, but based on last week’s temperatures, I am looking for another rare drawdown in supply. This is likely to keep the market underpinned most of the week especially after Thursday’s larger-than-expected draw and Friday’s wicked rebound rally.

On the daily chart, we’re still looking at three retracement zone controlling the price action.

On the upside, the main resistance is $2.807 to $2.847. On the downside, the main support is $2.739 to $2.720.

The intermediate range at $2.766 to $2.792 is likely to act like a pivot.

Overall, the chart pattern and the inconclusive fundamentals suggest that investors should brace for continued volatility and the possibility of another two-sided trade.

Based on the early price action, it looks like the direction of the market today is going to be determined by trader reaction to the intermediate 50% level at $2.766. Watch the price action and read the order flow at this price all session.