Natural Gas Price Fundamental Weekly Forecast – Bullish Over $3.050, Bearish Under $3.011

Natural gas futures fell sharply last week as investors shifted their focus back to the traditional supply/demand fundamentals once the threat of a hurricane striking Florida was reduced. Traders also reacted to a U.S. government report that showed a higher-than-usual weekly storage build during the previous week and a shift in the weather forecast from usually warm in several key demand areas to cool.

November natural gas futures settled the week at $3.021, down 0.064 or -2.07%.

Early in the week, investors priced in the possibility that Hurricane Maria would turn northwest and head towards Florida. The state is still trying to recover from the impact of Hurricane Irma so a direct strike from Maria would have been devastating.

According to the U.S. Energy Information Administration, utilities added 97 billion cubic feet of gas into storage during the week-ended September 15. This was slightly higher than analysts’ 91 bcf injection forecast.

That compares with a 54 bcf increase during the same week a year ago and a five-year average rise of 73 bcf for that period. It was a third week in a row that injections were larger than usual.

The especially large injection, or one that was well above the five-year average, was not a surprise due to the cool temperatures and power outages brought on by Hurricane Irma.

Sellers also responded to a change in the weather forecast calling for cooler temperatures over the next 8 to 14 days. This could put a dent in demand.

Forecast

Traders are likely to react to the latest weather reports this week as the weekly EIA storage report data continues to be unreliable due to the impacts of Hurricane Harvey on the Texas Gulf Coast area and Hurricane Irma on Florida.

According to natgasweather.com, from September 21 to September 27, “High pressure will dominate east of the Plains through early next week with highs of 80s and 90s.”

“The west will be cool due to chilly fall-like weather systems bringing valley rain and mountain snow showers into early next week.”

“Weather systems will track across the central and southern U.S. during the middle of next week to end the current warm spell, spreading into the East after.”

“Overall, strong vs normal demand until Tuesday, then near normal as a seasonal Fall pattern sets up.

The chart pattern suggests a rangebound trade is likely this week. The main range is $2.886 to $3.214. Look for a two-sided trade on both sides of $3.050 to $3.011.