Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $3.160 Will Set the Tone Today

Natural gas prices surged early in the session on Tuesday with traders even attempting a breakout above a key technical retracement zone. Prices retreated from their intraday high at $3.176, but the futures contract still managed to post a solid gain.

December natural gas futures settled at $3.152, up 0.018 or +0.57%.

The market continued to be supported by forecasts for increased heating demand over the next two weeks.

According to natgasweather.com for the November 7 to 13 time period, “Chilly conditions will continue across the north-central U.S. the next few days with lows of single digits to 20s”

“The East Coast will cool mid-week as a frontal boundary moves through with highs of upper 40s to 60s.”

“A rather cold weather system will track across the upper Midwest and Northeast Friday to Saturday for a surge in heating demand as lows drop into the teens and 20s.”

“The southern U.S. will be mild to warm with highs mainly in the upper 60s to 80s.”

“Overall, demand will be moderate through Thursday, then high Friday through Sunday.”

Forecast

Tuesday’s price action suggests the key level to watch today is $3.160. A sustained move over this level will indicate the presence of buyers. This could create enough upside momentum to challenge the main top at $3.198. This price is a potential trigger point for an acceleration to the upside since the next major resistance doesn’t come in until $3.353.

The inability to overcome $3.160 and sustain the move will signal the presence of sellers. It will also indicate that the increase in demand due to the cold weather has been fully-priced into the market. This could lead to a fast break into the main 50% level at $3.100.

The market will start to weaken further if $3.100 fails as support with the next target zone coming in at $3.065 to $3.024.

In other news, Thursday’s U.S. Energy Information Administration storage report is expected to show a build of 8 billion cubic feet (bcf) to 24 billion cubic feet for the week-ending November 3.

That compares with an increase of 54 bcf during the same week a year earlier and the five-year average of 45 bcf for the period.

Watch the price action and read the order flow at $3.160 today. Trader reaction to this level will tell us if the buying is getting stronger, or if sellers are retaking control.