Natural Gas Weekly Fundamental Analysis, November 9 – November 13, 2015 Forecast

Weekly Analysis and Recommendation:  December Natural Gas futures finished higher last week, confirming the previous week’s technical closing price reversal bottom. Generally oversold conditions due to exhaustion selling the week-ending October 30 also helped boost prices as well as a change in the weather forecast. For the week, the futures contract finished at $2.3550. This put it up $0.0500, or 2.17%.

The market finished the week in a strong position as traders reacted positively to signs that cold weather was returning to key demand areas. The problem for the bullish traders is the models are predicting the cold weather to return near the end of the month.

This likely means a sideways trade as investors gather more information. The initial rally last week was related to short-covering. This market needs actual buyers to come in to sustain a rally.

This week’s supply and demand report showed the amount of working natural gas in storage matched the record level posted three years ago and is expected to surpass it in November, the federal government reported on November 5.

There was 3.929 billion cubic feet of surplus working natural gas the week-ending October 30, the same amount in storage on November 20, 2012, according to the U.S. Energy Information Administration.

Although October marks the traditional end of the injection season, inventory increases are likely to continue through the first few weeks of November. If temperatures continue to be mild then inventories could surpass 4 trillion cubic feet in the coming weeks.

Forecast

If meteorologists stick with a forecast for colder temperatures at the end of the month then look for a sideways trade because demand is not expected to exceed supply. This would allow the inventory to continue to build towards a record storage number.

If the weather pattern changes and the colder temperatures are predicted to occur earlier than previously estimated then we could see more short-covering this week.

The only way this market will turn bullish is if there is a forecast for a lingering cold spell.

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: 

New weather models are predicating the chance for a cold front to push into the eastern part of the country toward the end of November. If the models are correct then this front could produce the coldest burst this season. However, the cold temperatures are not expected to have any lasting value. This type of forecast is likely to produce “spiking” price action. 

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)