Natural Gas Price Fundamental Daily Forecast – Rangebound Until Cold Weather Returns
Natural gas futures gapped lower early Monday as investors reacted to the weather, the chart pattern and new data from the U.S. Commodity Futures Trading Commission (CFTC).
At 0630 GMT, December Natural Gas futures were trading $3.133, down $0.027 or -0.85%.
Traders are saying there should be enough fuel available to meet winter demand even if the weather turns colder than currently expected because stockpiles were at near normal levels for this time of year and gas output was rising.
The latest forecast for the coming winter from the U.S. National Oceanic and Atmospheric Administration (NOAA) shows this coming winter would be 13 percent colder than last winter and close to average of the previous 10 years.
The trend is up according to the daily chart. It turned up on Friday when buyers took out the previous top at $3.167. However, today’s reaction suggests the move may have been triggered by buy stops rather than new buying.
The main range is $3.353 to $3.013. Its 50% level at $3.183 stopped the rally at $3.185 on Friday. Overtaking this level could trigger a rally into the next target at $3.223.
The new short-term range is $3.013 to $3.185. If the selling continues today then we could retrace into $3.099 to $3.078.
In other news, speculators in four major markets reduced their bullish bets by 14,346 contracts to 211,540 in the week to October 10. That compares with a five-year (2012-2016) average speculative net long position of around 127,300.
Forecast
According to natgasweather.com for the period October 12 to October 18, overall, demand will be moderate to low.
Temperatures are expected to drop into the end of October. This will lead to increased demand for heating. However, this doesn’t necessarily mean prices will rise since the increased demand for heating will likely be offset by a drop in demand for air conditioning. This suggests we’re headed towards a sideways market over the near-term.
Forming support after a break into $3.099 to $3.078 will indicate the presence of buyers. However, don’t expect a major rally to take place unless buyers can clear out $3.223.
This article was originally posted on FX Empire
