Natural Gas Price Fundamental Daily Forecast – Two-Sided Trade Expected Until Weather Turns Colder

Natural gas futures are edging lower on Friday as traders expressed disappointment in the lack of clarity over cold temperatures in the late month forecasts. Traders are primarily reacting to comments from Bespoke Weather Services that pointed toward overnight runs in the weather models that showed no changes to gas-weighted degree day expectations over the next 15 days.

At 13:36 GMT, December natural gas futures are trading $5.600, down $0.116 or -2.03%.

Bespoke added that models did, however, trend “less favorable for cold in the back of the forecast versus yesterday, but are far from a pattern look that would suggest game over for colder risks.”

“We know price action at this point in the year will be driven by the weather changers, mostly, but the pattern remains very noncommittal, exhibiting variability with no clear lean in the medium range. As long as that remains the case, price action will remain quite choppy.”

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration reported on Thursday that domestic supplies of natural gas rose by 63 billion cubic feet (Bcf) for the week ended October 29. That was below the average increase of 70 Bcf forecast by analysts polled by S&P Global Platts.

Ahead of the report, NGI reported that results of a Reuters survey ranged from injection estimates of 47 Bcf to 71 Bcf, with a median build of 64 Bcf. A Wall Street Journal survey landed at an average build expectation of 64 Bcf. Estimates ranged from increases of 47 Bcf to 74 Bcf. NGI’s model predicted a 68 Bcf injection.

Total stocks now stand at 3.611 trillion cubic feet (Tcf), down 313 Bcf from a year ago and 101 Bcf below the five-year average, the government said.

Daily Forecast

Technically, December natural gas futures remain rangebound with $5.832 to $6.011 the key resistance and $5.269 to $4.956 the major support.

We could see an upside bias develop on a sustained move over $5.652 and the downside bias resume on a sustained move under $5.514.

Look for this pattern to continue as long as temperatures remain mild in key demand areas.