Natural Gas Price Fundamental Daily Forecast – Turmoil in Europe/Russia Area Could Lead to Supply Disruptions

Natural gas futures are edging lower on Monday with traders already pressing last week’s low shortly before the regular session opening. Short-sellers are still in control, supported by delayed winter demand, high production levels and Russia’s commitment to provide enough supply to Europe. The latter is curtailing Europe’s demand for U.S. liquefied natural gas (LNG) exports.

At 12:54 GMT, December natural gas futures are trading $4.839, down $0.041 or -0.84%.

Weather Demand Uncertainty Weighing on Prices

Natural Gas Intelligence (NGI) reported that Bespoke Weather Services said that, while the Northern Plains and Great Lakes were walloped with freezing temperatures, blustery winds and sporadic snow showers late in the week, the outlook for much of the Lower 48 through November failed to impress futures traders.

“That has been the theme for a while now, as the pattern refuses to show much deviation from normal,” Bespoke said. Forecasts are “simply bouncing around with some modestly warmer and colder periods in all areas from the Plains to the East…” The “only persistent anomalies” are the “warm ones out in the West, where of course, there are fewer people, so less significance to natural gas markets.”

At “this time of year,” the firm added, “it is mostly a play on the weather forecast, which keeps our confidence on the low side in terms of guessing which way the market will move in the near-term.”

Short-Term Weather Outlook

According to NatGasWeather for November 15-21, “One weather system will track across the Great Lakes, Northeast, and Mid-Atlantic the next few days with rain, snow, and chilly lows of 20s and 30s. A second system will bring rain and snow to the Northwest with lows of 30s-40s. Most of the rest of the U.S. will be mild to warm and dry w/highs of 60s to 80s.

The system over the Northwest will track across the Midwest late in the week, while tapping colder Canadian air for lows of teens to 30s. Weather systems will continue across the northern U.S. next weekend, but with mild breaks between.

Overall, demand will be moderate Monday, low Tuesday – Thursday, then moderate-high late in the week.”

Daily Forecast

The fundamentals are expected to be bearish at the start of the session on Monday, but with prices so relatively low, technical buyers could come in at any time to alleviate some of the downside pressure by triggering a short-covering rally.

Fundamentally, keep an eye on the midday forecasts for any potentially bullish changes. The direction could change quickly if conditions turn favorable for the bulls.

Also monitor the activity overseas due to the possibility of pipeline interruptions amid a migrant crisis and political turmoil affecting countries in between Russia and the heart of Europe.