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James Hyerczyk
Natural Gas

Natural gas futures are edging higher on Friday shortly after the regular session opening. Even after three lower closes, the market is having a hard time breaking through the pair of technical support levels that have been propping up prices for nearly two weeks.

The sideways price action the last ten sessions suggests that speculative bulls are having a hard time letting go of their long positions, and the major short-sellers are having a difficult time regaining control although they haven’t been spooked into aggressively covering their positions either.

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The daily chart indicates if the market is going to weaken, it could go straight down since support is spread wide apart. On the other hand, the longs may be looking beyond late September and October, remembering last year’s price spike on early winter cold. Additionally, there are still commodity funds holding net short positions, who may want to cover.

At 13:31 GMT, November natural gas futures are trading $2.592, up 0.23 or +0.90%

On Thursday, the Energy Information Administration (EIA) reported an 84 Bcf injection into U.S. natural gas storage for the week-ended September 13. This was higher than the consensus estimate of 75 Bcf.

Reuters analysts predicted a 78 Bcf consensus, with predictions ranging from 71 Bcf up to 85 Bcf. The Intercontinental Exchange EIA Financial Weekly Index futures contract settled at 86 Bcf on Tuesday. Natural Gas Intelligence’s model forecast a 79 Bcf build.

Last year, the EIA recorded an 84 Bcf build for the period, and the five-year average is an injection of 82 Bcf.

Stocks were 393 Bcf higher than last year at this time and 75 Bcf below the five-year average of 3,178 Bcf, according to the EIA data.

Short-Term Weather Outlook

According to NatGasWeather for September 20-26, “Strong high pressure continues across Texas and the South with highs of 80s to 90s for strong late season demand. The western and central US will be unsettled as weather systems bring showers and highs of mostly 60s and 70s with lows of 30s and 40s. The corridor from Chicago to New York City will be comfortable with highs of 70s to 80 for light demand. A brief cool shot will impact the Midwest mid-week, while also not as hot over Texas/South. Overall, national demand will be high across the southern US and low across the northern US, averaging out to moderate.”


Daily Forecast

Technically, the main trend is up. However, momentum shifted to the downside on September 17 with the formation of a closing price reversal top at $2.745.

A trade through $2.551 will change the main trend to down. This could trigger an acceleration to the downside with the next target coming in at $2.440. A trade through $2.745 will signal a resumption of the uptrend.

Continuing to trade inside the $2.585 to $2.691 retracement zone will indicate the bulls and the bears are somewhat balanced.

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