Natural Gas Price Fundamental Daily Forecast – Weaker on Forecasts Calling for Lower Cooling Demand

Natural gas futures are edging higher at the mid-session after clawing back earlier losses. The market was under pressure on the opening after weather-driven demand eased over the weekend. Bespoke Weather Services reported declines in both projected cooling degree days (CDD) and heating degree days (HDD).

At 15:22 GMT, December natural gas futures are trading $5.297, up $0.039 or +0.74%.

Natural Gas Intelligence (NGI) reported that liquefied natural gas (LNG) feed gas flows were down 0.5 Bcf/d early Monday amid planned maintenance at the Cove Point LNG facility in Maryland, analysts at EBW Analytics Group said.

Short-Term Weather Outlook

According to NatGasWeather for September 20-26, “A weather system with showers and thunderstorms will exit the Northwest and track across the Midwest/Great Lakes mid-week, then stall over the Ohio/Valley and East late in the week. Highs with this system will be mild to nice with highs of 60s to 70s, locally upper-50s.

The nation’s strongest demand will be from California to Texas as high pressure brings hot highs of 90s to near 100F. National demand will drop to very light levels late this week and next weekend as highs of upper 60s to 80s rules most of the U.S. and with very little coverage of 90s. Overall, national demand will be moderate Monday, then low-very low after.”

Early Peek at Thursday’s EIA Storage Report

Thursday’s U.S. Energy Information Administration storage report is expected to come in slightly above historical norms. NGI’s model is calling for an 82 Bcf injection into natural gas stocks for the week-ended September 17.

Last year, the EIA recorded a 70 Bcf injection for the similar week, and the five-year average injection is 74 Bcf.

Daily Forecast

The daily chart indicates December natural gas futures are getting close to shifting momentum to the downside. We expect to see one more rally to test the resistance at $5.79. Our first objective is $5.434.

If sellers come in at $5.434 then look for new pressure to drive the market into at least $4.867 to $4.649.

“Weather-driven demand for natural gas could slip as cooling demand halves by Thursday, however, while shut-in Gulf of Mexico supply trickles back and technical analysis suggests deeper tests of support,” the EBW team said. “Continued price weakness may be likely later this week.”

Bespoke Weather Services added, “At some point, one would think our prices here in the U.S. can move according to changes in fundamentals and soon enough, changes in weather forecasts.”

“At this stage, we are at a point where we will need some cold in winter to justify current prices, but it remains early to focus on weather, especially with our market just blindly following trends in European prices.”