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Natural Gas Price Fundamental Daily Forecast – Volatility Could Increase After EIA Release, but Sellers Still in Control

By:
James Hyerczyk
Published: Aug 3, 2017, 05:19 UTC

Natural gas futures continued to consolidate on Wednesday on both sides of the former major bottom at $2.800. Long traders are still licking their wounds

Natural Gas

Natural gas futures continued to consolidate on Wednesday on both sides of the former major bottom at $2.800. Long traders are still licking their wounds after the market’s steep drop on Monday took it to multi-month lows. Some short-sellers are taking profits or lightening positions.

September Natural Gas settled at $2.811, down 0.008 or -0.28%.

There has been no change in the weather forecast, which earlier in the week, triggered a gap-lower opening, sending natural gas prices to a low not seen since early April. Traders will now shift their focus to Thursday’s U.S. government storage report.

The report could trigger a volatile, two-sided reaction, but since the data is stale, I don’t expect it to lead to a dramatic change in trend.

Natural Gas
Daily September Natural Gas

Forecast

Today’s U.S. Energy Information Administration report is expected to show a build of about 22 billion cubic feet in the week-ended July 28.

That compares with a gain of 17 billion cubic feet in the preceding week, a withdrawal of 6 billion a year earlier and a five-year average rise of 44 billion cubic feet.

Total natural gas in storage currently stands at 2.990 trillion cubic feet, according to the EIA, 9.2% lower than levels at this time a year ago by 3.7% above the five-year average for this time of year.

The current weather forecast still calls for below normal temperatures across the U.S. that could persist through the first half of August.

Over the short-run, there is nothing that suggests the market is getting ready to turn higher. Therefore, I still think the market remains in the hands of some pretty strong short-sellers. This likely means that rallies will continue to be met with a wall of sellers, preventing a change in trend.

I remain optimistic over the long-run. Barring a huge jump in production and above average storage injections, I think the winter heating season is going to begin with a potentially bullish set-up. Based on this assessment, it may be wise to start taking a look at some of the deferred futures contract.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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