Natural Gas Price Fundamental Daily Forecast – Warm Weather Woes Weighing on Prices

Natural gas prices fell to their lowest level since August 3 as heating demand concerns due to forecasts calling for the fifth warmest November on record continued to weigh on prices. Probably preventing a complete washout is the steady demand for liquefied natural gas (LNG). Cash prices also remained under pressure as warm temperatures continued to populate high demand areas.

At 21:02 GMT, December natural gas futures are at $2.859, down $0.029 or -1.00%.

Natural Gas Intelligence said, “Temperatures shifted from chilly in late October to unseasonably comfortable throughout the Lower 48 early this month. Forecasters expect that, by November 10, gas demand would have dropped more than 100 Bcf from the beginning of the month. Further declines are broadly expected.”

Short-Term Weather Outlook

The weekend weather data was only slightly changed, which means a solidly bearish weather pattern held through mid-November. Statistically, the GFS model lost 3 HDD’s, while the European model gained 4 HDDs. Also of interest, Tropical Storm Eta held together and is expected to provide a glancing blow to South Florida Monday, then drift into the Gulf of Mexico as a hurricane and stall before gradually fizzling.

Short-Term Outlook

Prices may be getting close to oversold on some technical charts so there may be a short-covering rally or two before the selling pressure resumes. Although the weather is difficult to predict, most forecasts call for milder temperatures to ease into the end of the month. This would make it difficult to sustain a rally.

Tropical Storm Eta could drop production in the Gulf of Mexico slightly and even more depending on how far it travels. Let’s just say it needs watching.

It’s nearing the Florida Keys at this moment, bringing heavy rains and wind gusts. It is expected to take a turn into the Gulf of Mexico, but cooler water temperatures may not allow it to develop into a hurricane.

I live in Florida, we are watching ETA, but so far it’s just rain and wind. This trend is expected to continue in the Gulf before fading away. Nonetheless, as they say, “It ain’t over ’til it’s over”.

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