Natural Gas Price Fundamental Daily Forecast – Upside Momentum Shift Targets $3.146 to $3.199

Natural gas futures are trading higher on Monday, helped by surprisingly cooler temperatures in the Midwest over the week and rising hopes of a fiscal stimulus deal from the U.S. government.

Technical factors are also contributing to the rebound in prices after a successful test of a short-term 50% – 61.8% retracement zone. Weather could become a factor late in the week as Tropical Depression Twenty-Six is expected to intensify into Tropical Storm Delta and become a possible Gulf Coast hurricane threat.

Last week, December natural gas futures settled at $2.991, down $0.286 or -8.73%.

Investors may be shifting their focus on new coronavirus relief aid aimed at cushioning the economic blow from the pandemic. President Trump’s illness, as well as Friday’s weak September jobs report, highlighted the urgency for further coronavirus stimulus after a months-long stalemate in Washington. Optimism for reaching a compromise has risen after House Speaker Nancy Pelosi signaled progress on Friday, saying “we continue to work on the text to move quickly to facilitate an agreement.”

Short-Term Weather Outlook

According to NatGasWeather for October 5 to October 11, “Cool conditions linger across the Great Lakes and Northeast in the wake of weekend weather systems with lows tonight dropping into the 30s and 40s, with highs Monday of 50s and 60s. The rest of the U.S. will be warm to very warm with highs of 70s to 90s, locally 100s in the Southwest. A fresh cool shot will sweep across the Great Lakes and Northeast Wednesday to Friday for locally stronger demand but with mostly light demand elsewhere. Overall, national demand will be moderate Monday, then low the rest of the week.”

U.S. Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas rose by 76 billion cubic feet (Bcf) for the week-ended September 25. This was in line with the forecast.

Total stocks now stand at 3.756 trillion cubic feet (Tcf), up 471 billion cubic feet from a year ago, and 405 billion cubic feet above the five-year average, the government said.

Daily Forecast

The main trend is down according to our trend indicator. The main range is $2.657 to $3.370. The market found support inside its 50% to 61.8% retracement zone at $3.014 to $2.929 on Friday, perhaps attracting the buyers that trigger today’s early rally.

The short-term range is $3.370 to $2.922. Its retracement zone at $3.146 to $3.199 is the next potential upside target. Since the trend is down, sellers could return following a test of this area.

The possibility of new fiscal stimulus could also be driving up prices. So far we’re looking at short-covering. It will be hard to be a buyer without increased LNG demand and more favorable weather conditions for a rally, but new stimulus could be enough to keep the market underpinned.

It’s hard to say how the developing tropical storm will affect prices, but there’s time.

For a look at all of today’s economic events, check out our economic calendar.