Naturas Gas Monthly Forecast – November 2017

Natural gas prices traded within a tight range during the month of October as we head into the winter and hence the month of October is more of positioning of the trades and traders making sure that they take the right trades in anticipation of larger moves in the months ahead. As we have been mentioning in many of our monthly forecasts, the prices of natural gas depends a lot on demand and the weather conditions as well and this is why the month of October is generally slow and low as the market awaits the winter months.

Gas Prices Weak in October

The weather forecasts have been a bit choppy and unclear during October and this was one of the main reasons for the gas prices to be weak. Also, the supply was also in very good terms which was able to swamp the demand and keep the prices in the lows of the range till the end of the month. Over the recent months, the use of gas has changed a lot and from being exclusively used only in factories and only for cooling, we are seeing the increasing trend of gas being used for production of electricity as well.

In fact, in many of the developed countries, most of the addition in the power capacity is mainly through gas production and alternate sources of energy rather than using coal or oil. This is the reason why we are seeing divergence of prices in the oil and gas industry which usually move hand in hand. Over the last month, we saw the oil prices continue to move higher beyond the $50 region while the gas prices continued to remain low in anticipation of better times ahead.

Those better times are likely to come in the last few months of the year as the winter sets in and the need for cooling in the US and other parts of the world begins to increase exponentially within this period. With gas being the primary source for heating, the prices tend to rise during this period as the demand grows. Though the capacity of gas production has also increased over the last year or so, the demand and the usage has also become more widespread for the gas industry and this has helped to keep the prices ticking higher.

Gas Prices Likely to be Bullish

Looking towards the month of November, we are likely to see the beginning of the uptrend in the gas prices as the winter begins to set in. This is a seasonal thing that usually happens during the onset of winter and the rise in prices continues through to the end of winter as the need for cooling and the need for gas as a cooling product is something that cannot be denied. This dependence on gas is what makes the prices tick higher during this period.

Technically, we are finding some support in the prices of natural gas in the 2.90 region which should bring in a lot of buying and we believe that this region could mark the lows for this instrument as far as November is concerned. On the higher side, we have the resistance coming in at the 3.2 region which also marks the highs of the range from the month of October. If and when the prices break through this region, which is something that we expect to happen in November, the prices are then likely to gradually move to the 3.44 region during the course of the month. This is the range that we expect for the upcoming month.

So the traders can position themselves for the uptrend in the coming months but also make sure that they keep tight stop losses and not assume anything while they trade, even if it is something seasonal and hence quite likely to happen every year.