Natural Gas Price Fundamental Daily Forecast – Traders Still Pricing in Mild Break in Temps

Inconsistencies in the weather forecast are pushing natural gas prices higher early Tuesday. However, the market seems to be glued to a key technical retracement zone that is helping to hold the market in a range.

On Monday, the market was pressured by forecasts which showed a stretch of milder temperatures starting next week. Today’s price action suggests there may have been a slight change in the forecast.

Traders continue to expect a series of cold shots to sweep through the country this week. However, they are also pricing in a mild break to follow from December 12-16.

At 1400 GMT, January Natural Gas is trading $4.550, up $0.211 or +4.86%.

NatGasWeather Forecast

“Mild high pressure is still expected to gain in coverage and strength across the central and southern U.S. December 11-12, then into the East December 13-16, easing national demand as temperatures warm above normal,” NatGasWeather said. “We continue to expect the mid-December northern and eastern U.S. ridge to the first be tested by weather systems coming out of the Plains around December 16-17.

If the ridge shows signs of weakening or shifting, the markets could see this as somewhat bullish. However, if the mild ridge proves it will hold strong to keep a milder than normal pattern over the northern and eastern U.S. through December 20, the markets are going to be disappointed.”

Radiant Solutions Forecast

The forecasters at Radiant Solutions are saying, “This period remains one of transition as a trough deepens over Alaska and locks out the Arctic source region. Below and much below normal temperatures, however, are common across the eastern half at the start of the period and expected to linger through late period along the East Coast.”

Radiant’s 11-15 day forecast “remains a warmer than normal one in this period, with changes being additionally warmer in the early half along the East Coast. Although, a trough progressing through leads to colder change to the southern half in the latter stages. Overall the period should see “widespread coverage of above normal temperatures in the eastern two thirds and near normal West.”

Bespoke Weather Services

Bespoke Weather Services says, “We began to see how the warmer pattern through mid-December could break with a trough across the middle of the country, allowing colder air in the South, though this classic El Nino-like pattern would likely struggle to deliver much Arctic air or even bring colder air to the North. Thus the long-range view still appears slightly tilted bearish even if the more significant warmth of from December 12-17 does not look to dominate through the final third of December.”

Forecast

The price action continues to indicate that the direction of the market will be determined by trader reaction to the retracement zone at $4.557 to $4.431.

A sustained move over $4.557 will indicate the presence of buyers. A sustained move under $4.431 will indicate the return of sellers.

On the upside, targets come in at $4.776, $4.875 and $4.964. The downside is still being supported by a major retracement zone at $4.082 to $3.873.