Natural Gas Price Fundamental Daily Forecast – Weather Neutral as Traders Continue to Straddle $2.359 Pivot

Natural gas futures are inching lower on Tuesday as traders continued to assess the impact of the 11-15 day weather forecast on prices. The market started the week in a strong position, but prices collapsed late in the session to produce a potentially bearish technical closing price reversal top. However, the selling stopped at a key technical level, bringing the market back to a neutral state.

At 13:02 GMT, August natural gas is trading $2.367, down 0.006 or -0.29%.

Futures traders are ignoring the strength in the cash market and are instead focusing on the long-term weather data.

11 to 15 Day Forecast

“Weather data overnight Sunday generally shifted slightly cooler overall, though gas-weighted degree days for the next couple of weeks are still set to average above normal levels thanks to some heat in the pattern in the final third of June,” according to Bespoke Weather Services.

“There has been a shift in the orientation of above-normal temperatures, as the anomalous heat looks more focused north in the 11- to 15-day than it appeared on Friday,” Bespoke chief meteorologist Brian Lovern said.

Bespoke also saw some notable model difference at the very end of the month into early July, as the European ensemble data favored a slightly hotter look, while the American data was quick to pull the heat ridge back toward the West and begin cooling the eastern half of the nation. Bespoke’s forecast continued to lean toward the European model, although the transition showing up at the end of the American data “is something we believe can occur after the first week or so of July, following along with recent pattern cycling.”

Short-Term Weather Outlook

According to NatGasWeather for June 17 to June 23, “A messy pattern across the country this week with numerous weak weather systems/fronts producing areas of showers and thunderstorms. It will be comfortable with 70s and 80s across most of the northern and interior US, while very warm to hot around the periphery with 80s to 100s across the West and 80s to lower 90s across Texas, the South, and Southeast. It will be hot with 90s up the Atlantic Seaboard Monday, then cooling several degrees mid-week. Next week will bring strengthening high pressure across the South & East with 80s and 90s. Overall, demand will be moderate to low.”

U.S. Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported Thursday that domestic supplies of natural gas rose by 102 billion cubic feet (Bcf) for the week-ending June 7. Traders were looking for a reading of 110 Bcf.

Total stocks now stand at 2.088 trillion cubic feet (Tcf), up 189 Bcf from a year ago, but 230 Bcf below the five-year average, the government report showed.

Weekly Forecast

Traders continue to hold prices inside a trading range as they wait for the weather forecasts to line up toward the bullish side.

The short-term range is $2.305 to $2.413. Its 50% level or pivot at $2.359 is controlling the direction of the market. Traders could continue to straddle the pivot as they build a support base.

The main range is $2.745 to $2.305. If the buying is strong enough to take out $2.413 with conviction then this could generate the upside momentum needed to challenge its retracement zone at $2.479 to $2.520.

Taking out $2.305 will signal the return of sellers, but the lack of follow-through to the downside through this level will indicate aggressive buyers are coming in on the break in anticipation of hotter temperatures later in the month or early July.

A few more days inside the range will tell us if buyers are moving toward buying strength, or waiting for a break into a value area.