Natural Gas Price Fundamental Daily Forecast – Weak Demand to Weigh on Prices

Natural gas futures settled down on Thursday despite a lower-than-expected storage build from the U.S. Energy Information Administration. Traders blamed low volume for the market’s inability to rally through a major resistance zone on the daily chart.

Seasonal factors also weighed on prices. At this time, most of the U.S. is going through the transition from summer to fall so the need for air conditioning and heat is expected to be minimal. In other words, demand is expected to fall flat over the next few weeks because it’s not going to be too hot or too cold.

According to the EIA, weekly storage during the week-ending September 22 grew by 58 billion cubic feet. Traders were looking for a build of about 66 bcf.

Last week, the report showed a gain of 97 bcf, a build of 49 bcf a year earlier and a five-year rise of 84 bcf.

Total natural gas in storage currently stands at 3.466 trillion cubic feet, according to the EIA, about 3.5% lower than levels at this time a year ago and mostly in line with the five-year average for this time of year.

According to natgasweather.com for September 28 to October 4, a weak cool front pushed into the east on Thursday. It is expected to ease recent warm conditions, “with a weather system with showers and thunderstorms quick to follow Friday and Saturday with slightly cool temperatures.”

“Texas and portions of the South will see heavy showers the next few days, along with comfortable highs of 60s to lower 80s. The West remains warm with highs of 70s to 90s.”

“During the middle of next week, warm high pressure will gain ground east of the Rockies with 70s north and 80s to near 90 F south.”

“Overall, national demand will be easing to moderate.”

Forecast

The price action this week’s suggests major resistance is layered at $3.055, $3.086 to $3.094 and $3.122.

Earlier this week, the market posted a technical reversal at $2.974. However, the major support levels are $2.957 and $2.954.

The daily chart indicates there is plenty of room to the downside under $2.954 with $2.886 the next major target.

Look for a weak demand situation to weigh on prices.