Natural Gas Price Fundamental Weekly Forecast – Supported by Rising Heat Demand, Cold Weather

After struggling early in the week, U.S. natural gas futures mounted strong recovery late in the week to finish higher. Prices were supported by forecasts for rising heating demand and colder weather this winter than in the past two years.

December Natural Gas settled the week at $3.160, up $0.114 or +3.74%.

Traders also said that output was slow to recover as energy companies were still reactivating Gulf of Mexico gas wells that had been shut due to Hurricane Nate, which hit the area the week-ending October 6.

Forecast

The new forecast is expected to underpin prices this week, but it’s hard to tell at this time if this means a rangebound trade or an extension of the newly formed rally.

Additionally, traders think the gas burned to heat homes and businesses as the weather turns colder through the end of October would basically offset declines in gas burned to generate power to run air conditioners.

Looking ahead to next Thursday’s U.S. Energy Information Administration’s (EIA) weekly storage report, utilities likely added 69 billion cubic feet of gas into storage in the week to October 13.

If this figure comes in as expected then this would leave the total amount of fuel in inventories near the five-year average for this time of year at around 3.7 trillion cubic feet. That compares with a 77 bcf increase during the same week a year earlier and the five-year average of 78 bcf for the period.

The chart pattern suggests that shorts shouldn’t worry too much about their positions unless the buying becomes strong enough to take out $3.353.