Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $2.934 Will Set the Tone Today

Natural gas futures attempt to rally further on Wednesday failed to draw enough buyers to sustain the rally and the market closed lower for the session. Like Tuesday’s strong rally, natural gas speculators tried to drive prices higher on the back of a sharp rise in crude oil futures, but unlike that move, traders decided to shift their focus on the weather and the upcoming storage report, thereby killing the rally.

September natural gas futures settled at $2.914, down $0.017 or -0.58%.

Meteorologists forecast temperatures during the month of August will come in near average after a warmer-than-normal June and July.

Natgasweather.com says:  “While weather patterns have been hot the past couple weeks over much of the country, this coming weekend a weather system and accompanied cool shot will sweep down the East Coast with showers. This will bring mostly comfortable conditions over the east-central U.S. for lighter demand. It will still be hot over the West, Central, and South, but national demand will drop to more seasonal levels without hot conditions over the East.

This likely means natural gas demand will be down this week because the cooler weather will be hitting highly populated, high demand areas.

Forecast

Natural gas prices are likely to continue under pressure on Thursday unless the storage number comes in better than expected. However, just like last week’s report and subsequent price action, any rallies are likely to be met with a wall of sellers.

The current daily chart pattern indicates there are multiple levels of potential resistance at $2.934, $2.966, $2.984 and $3.011. Although aggressive counter-trend buyers have been trying to sustain a series of higher bottoms at $2.800, $2.830 and $2.866, the buying doesn’t seem to be strong enough at this time to sustain a rally and change the trend to up.

As far as the U.S. Energy Information Administration’s weekly storage report is concerned, traders should look for a 34 billion cubic feet build for the week-ending July 21. This would put inventories about 4 percent above normal for this time of year. This will compare with a 20 bcf increase the same week a year earlier and a five-year average build of 47 bcf.

The key price level on the chart to watch is $2.934. A sustained move over this level will likely lead to a labored rally. A sustained move under this level will indicate the presence of sellers.