Natural Gas Price Fundamental Daily Forecast – Upcoming Cold Blast Won’t Last Long Enough to Sustain Rally

Natural gas prices posted a volatile two-sided trade on Wednesday before settling lower for the session. The price action continued to be driven by the short-term weather outlook.

December Natural Gas futures settled at $3.065, down $0.063 or -2.01%.

According to natgasweather.com for the period October 18 to October 24, “Warm up high pressure will dominate east of the Rockies through the week-end with highs of upper 60s and 70s across the northern U.S., and upper 70s to mid-80s over the southern U.S.”

“The Northwest will be mild, while California and the Southwest very warm with 80s and 90s.”

“(A) colder weather system will arrive over the central U.S. early next week, then track across the Great Lakes and East after.”

“Overall, demand will be moderate to low, but increasing next week.”

In other news, Thomson Reuters forecast U.S. gas consumption would rise to 73.0 billion cubic feet per day (bcfd) next week from 71.9 bcfd this week.

However, production in the lower 48 U.S. states on Tuesday was expected to rise to 74.4 bcfd, its highest level so far this month.

According to the U.S. Energy Information Administration, output from shale fields alone would increase for an eighth month in a row to a record high 60.9 bcfd in November.

Forecast

Although next week will finally bring some colder weather systems across the north-central and eastern U.S., while bringing the first truly fall-like conditions across the Great Lakes and Northeast so far this October, the news is not generating any strong buying because reinforcing cold is not expected to follow.

Traders are reacting more to the warm weather before this event and the return of warm weather after the event. All this cold weather pattern is likely to do is give traders a little taste of what could come once winter officially begins.

Looking ahead to Thursday’s EIA storage report, utilities likely added 55 bcf of gas into storage in the week to October 13, leaving the total amount of fuel in inventories near the five-year average for this time of year at around 3.7 trillion cubic feet (tcf).

The key area to watch on the charts remains $3.099 to $3.078. Look for an upside bias on a sustained move over $3.099 and for a bearish bias on a sustained move under $3.078.

Bearish traders are hoping increased production will drive prices lower. Bullish traders are hoping production remains stable until the cold weather returns.