Natural Gas Price Fundamental Daily Forecast – Upside Momentum Continues to Build

Natural gas futures are trading higher early Wednesday as investors continue to express concerns of the supply shortage. Bullish traders are also reacting to maintenance and weather issues.

Prices broke out over the June high at $3.033 on the nearly futures contract chart on late last week when the U.S. Energy Information Administration’s weekly storage report fell short of expectations.

After a one-day setback, the rally resumed on Monday and continued yesterday. The move taking place is being fueled by both aggressive short-covering and strong speculative buying. The weekly chart suggests that $3.033 is new support. It also shows that if the upside momentum continues, there is room to run to the February top at $3.389.

At 0751 GMT, November Natural Gas is trading $3.177, up $0.011 or +0.35%.

To recap the events driving the price action this week, higher-than-usual natural gas demand for this time of year caught the short-sellers off-guard, forcing them to cover their positions aggressively on Monday. This was due to heavy maintenance of nuclear power plants. Furthermore, the weather forecasts changed unexpectedly and are now showing a possible surge in demand before the end of this year’s shoulder season.

Forecast

Maintenance and storage deficit issues are currently driving the price action. However, some traders feel that these are short-term events and not likely to last much longer. However, the market is not on a timetable.

Once the maintenance is completed, traders are likely to turn their focus back to the weather. According to NatGasWeather.com for the period October 2 to October 8, “The West will see numerous weather systems bring showers over the next week but with mostly mild to just slightly cool conditions. Heavy rains are expected into the Southwest as tropical moisture from Rosa streams across. The southern U.S. up the Mid-Atlantic Coast will be very warm with highs of 80s to lower 90s. The Great Lakes and Northeast will be mostly mild to warm with highs of 60s to lower 80s due to strong high pressure, although with cooler exceptions near the Canadian border as weather systems provide glancing blows. Overall, a mostly comfortable early October pattern with light to moderate demand.”

Looking ahead to Thursday’s EIA report, traders are looking for a build of 47 Billion cubic feet.