Natural Gas Price Fundamental Daily Forecast – Traders Hung Up on Mixed 10-14 Day Forecast

Traders are looking 10-14 days into the future and aren’t likely to make a major move until the weather models agree. The short-term trend is still up which likely means traders will continue to react to the short-term retracement zone at $3.089 to $3.014.
James Hyerczyk
Natural Gas

Natural gas futures weakened on Tuesday as investors reacted to a weather forecast that showed greater chances of the polar cold “retreating back into Southern Canada during the first week of February,” according to NatGasWeather. However, there is one weather forecasting service that believes the recent sell-off may have been overdone. This opens up the possibility of a choppy, two-sided trade.

Early Wednesday, the market is already recovering some of yesterday’s losses. At 0850 GMT, March natural gas futures are trading $3.055, up $0.083 or +2.86%. Furthermore, there was no follow-through to the downside after closing on its low on Tuesday.

Basically, the new forecast from over the week-end showed that that the expected cold temperatures at the end of January may not extend into February.

NatGasWeather said on Tuesday, “Strong selling appears to be primarily driven by the weather data showing increasing odds of the frigid polar cold pool that’s to impact the U.S. through the end of the month retreating back into Southern Canada during the first week of February.”

“There remain ways the data trends back colder, but unless it does, the natural gas markets could remain disappointed,” the weather service added.

Bespoke Weather Services had a different take on Tuesday saying, “We had been looking for some short-term downside”, but the selling pressure yesterday “certainly surpassed all expectations,” Bespoke said.

Forecast

Traders are looking 10-14 days into the future and aren’t likely to make a major move until the weather models agree. The short-term trend is still up which likely means traders will continue to react to the short-term retracement zone at $3.089 to $3.014.

Since we believe the technicals tend to lead the fundamentals, we’re going to look for the market to strengthen over $3.089 and weaken under $3.014.

A sustained move over $3.089 could create the upside momentum needed to challenge the next key retracement area at $3.215 to $3.320.

On the downside, if $3.014 is taken out with conviction, the selling pressure could extend into $2.809 to $2.771.

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