Natural Gas Weekly Fundamental Analysis, November 16 – November 20, 2015 Forecast

Weekly Analysis and Recommendation: 

After consolidating over a short-term retracement zone for nearly two-weeks, January Natural Gas futures finally spiked to the upside, putting the market in a position to challenge the recent high at $2.566. A trade through this level targets the $2.700 to $2.7500 range.

Futures for January delivery settled up 0.0990, or 4.05%, at $2.5440 a million British thermal units on the New York Mercantile Exchange.

Helping to boost prices was a smaller-than-estimated rise in inventories for the week-ended November 6. According to the U.S. Energy Information Administration, natural gas inventories rose by 49 billion cubic feet to 3.978 trillion cubic feet, the highest level on record.

Stockpiles as of November 6 stood 10% above levels from a year ago and 4.5% above the five-year average.

Forecasts for colder weather also helped boost prices into the close on Friday. Cooler temperatures are now being forecast for the next two weeks. This news is likely to trigger a short-covering rally rather than a change in trend. This move will end as soon as the system fueling the rally breaks up. The existence of a lingering cold spell is the only way to sustain a rally and perhaps change the trend.

Look for early strength this week because of the upside momentum into the close. The next potential target is $2.700 to $2.7500 but speculators will have to assess risk on a day-to-day basis because this is a weather-driven rally. In other words, prices will continue to firm until the forecast changes, not when the actual cold front breaks.

On the bullish side, look for the rally to continue if any new forecast indicates that temperatures are going to get colder, or that the cold front is expected to extend beyond two weeks.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks. 

AccuWeather US Forecast Outlook:

Temperatures will probably be lower than usual across the central U.S. and into Louisiana for Thanksgiving week, according to CWG Weather Group. Cleveland could touch 27 degrees Fahrenheit (minus 2.8 Celsius) on Nov. 25, 10 degrees below average, AccuWeather data show.

A powerful storm will blast the central United States with flooding rain, heavy snow, strong winds and the potential for damaging thunderstorms during the third week of November.

According to AccuWeather Chief Meteorologist Elliot Abrams, people traveling through or living in areas from the central Rockies to the Mississippi Valley should be prepared for a dynamic weather event during the first half of the week.

“The storm is likely to hit more than a dozen states from New Mexico and Colorado to Texas, Louisiana and Illinois very hard,” Abrams said.

The nature of the storm could be severe enough to cause property damage and endanger lives.

Major disruptions to travel are likely. Initially, airline delays will spread over the Central states. However, ripple-effect flight delays and disruptions may expand to the West and East coasts as more crews and aircraft are displaced.

Major cities that are likely to be directly affected by the major storm include Denver; Dallas; Houston; Kansas City, Missouri; Oklahoma City; St. Louis; Little Rock, Arkansas; Memphis, Tennessee; Omaha, Nebraska; and Shreveport, Louisiana.

The slow-moving nature of the storm will mean multiple days of dangerous and damaging weather conditions in the Central states.

The storm will become caught in the middle of an atmospheric traffic jam for a time. The jam-up will bring the normal west-to-east movement of weather systems to a crawl in North America. 

WEEKLY

• Natural Gas Weekly Update
  Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)
• Weekly Natural Gas Storage Report
  Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)