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Natural Gas Price Fundamental Daily Forecast – Traders Waiting for Damage Assessment from Hurricane

By:
James Hyerczyk
Published: Aug 28, 2017, 03:52 UTC

Natural gas futures opened higher on Monday, but the market could not hold on to its early gains. The early buying was likely short-covering in response

Natural Gas

Natural gas futures opened higher on Monday, but the market could not hold on to its early gains. The early buying was likely short-covering in response to Hurricane Harvey which made landfall near key production areas near the Texas Gulf Coast. The slow-moving storm is now dumping heavy rains on the area, leading to unprecedented flooding.

At 0325 GMT, October Natural Gas futures are trading $2.922, down $0.002 or -0.07%.

The price action suggests that investors and speculators are still waiting for damage assessments from the area. Most of the activity in the area is related to crude oil, so with refineries shutdown, the impact of the storm is being felt the most in the gasoline market.

Workers have been evacuated from oil platforms in the Gulf of Mexico. According to the U.S. Bureau of Safety and Environmental Enforcement, about 26 percent of natural gas output in the Gulf had been shut down.

Natural Gas
Daily October Natural Gas

Forecast

The natural gas market could be put on hold until traders learn the extent of the infrastructure damage. There is also major flooding in the area so workers may not even be able to return to work in a timely manner.

The U.S. Bureau of Safety and Environmental Enforcement said in a news release, “After the storm passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back on line immediately. Facilities sustaining damage may take longer to bring back on line.”

Prices may get a boost if there is damage. The duration of any rally will be determined by the extent of any damage to the infrastructure. The early reaction by traders suggests the market is well-supplied at this time.

In other news, according to the U.S. Energy Information Administration, U.S. natural gas storage stood at 3.125 trillion cubic feet, 6.7% lower than levels at this time a year ago and 1.5% above the five-year average for this time of year.

According to natgasweather.com, “Comfortable temperatures will continue over the central and east-central U.S. this week with highs only in the 70s to lower 80s as weather systems sweep through. It remains very hot over the West with highs in the mid-80s to near 100 degrees. Overall, national gas demand will be moderate to low.

The current chart pattern has flagged support at $2.921, $2.892 and $2.886. Taking out $2.886 will turn the main trend to down. This may trigger an acceleration to the downside.

Resistance has been identified as $2.964 to $2.982.

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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