Natural Gas Price Fundamental Daily Forecast – Traders are Waiting for Updated 8 to 14 Day Forecast

Natural gas futures are trading mixed early Monday, trading lower shortly after the opening then moving higher. Traders are paying close attention to the 8 to 14 day forecast. At the same time, the market is trading inside a key retracement zone which is considered a “value zone” by investors looking at the long-term fundamentals.

At 0730 GMT, March Natural Gas futures are trading $2.858, up 0.012 or +0.42%.

This weekend’s cold snap was priced into the market, so the focus will likely be on the cold system hitting at the end of this week. If the forecast for this front changes to much colder temperatures then we could see a short-covering rally. If milder temperatures are put into the forecast for the end of the week then prices could drift sideways to lower.

Last week’s weekly government report showed a smaller-than-expected draw last week, but it wasn’t enough to shift momentum to the upside.

The U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas fell by 99 billion cubic feet for the week ended January 26. This was slightly below the consensus average guess of 100 bcf.

The five-year average withdrawal is 160 billion.

Total stocks now stand at 2.197 trillion cubic feet, down 526 bcf from a year ago, and 425 bcf below the five-year average, the government said.

Forecast

NatGasWeather.com, for the February 2 to February 8 time period, says, “Cold air will cover the Midwest and East today with highs of single digits to 30s, and with lows of 20s to -10F, including 20s and 30s into the southeastern U.S. A brief break will occur Sunday ahead of the next cold shot arriving early next week, with a second one to follow at the end of the week. The western and south-central U.S. will be mostly mild apart from the wetter Northwest. Overall, national demand will be high.”

Traders are starting to price this forecast into the market which is why it could hold inside the key retracement zone for the early part of the week. Once they know the status of the forecast for next week-end and next week then they will make their trading decision.

The major range is $2.532 to $3.259. Its retracement zone is $2.896 to $2.810. The minor range is $2.693 to $3.259. Its retracement zone is $2.976 to $2.909.

Combining the two retracement zones creates a key pivot area at $2.896 to $2.909. Trader reaction to this area is likely to determine the direction of the natural gas market this week.