Yahoo Finance Natural Gas Price Fundamental Daily Forecast – Market Clawing Back Last Week’s Discount, but Needs Catalyst to Sustain Move
Natural gas futures are edging higher early Tuesday as investors continue to react to the recovery in the Carolinas in the aftermath of Hurricane Florence and forecasts for warmer temperatures which should lead to increased demand. The limited price action suggests short-covering is taking place as buyers attempt to absorb the huge discount that was posted ahead of the storm last Thursday and Friday.
At 1048 GMT, November Natural Gas futures are trading $2.792, up $0.013 or +0.47%.
Bespoke Weather Services put it this way, “Hurricane Florence demand destruction was not quite as bad as anticipated, and combined with significant short-term heat it was enough to keep physical prices firm.”
Bespoke went on to say, “Yet today’s move seemed to be canceling out the overreaction” to Florence’s potential impacts in Friday’s trading, “and we now struggle to see what the upward catalyst would be to move prices above resistance around $2.85 given production back at record highs.”
Current Weather Forecast
According to its midday guidance on Monday, NatGasWeather is maintaining a warmer outlook for the back half of September that emerged over the weekend.
“The coming pattern looks especially warm across the southeastern U.S. with several more cooling degree days since late last week. Much of the northern U.S. is also expected to be warmer than normal, although for this time of the year this means mostly comfortable conditions with highs of 70s to lower 80s for very light heating or cooling needs.”
NatGasWeather went on to day, for the rest of September, weather-driven demand will come from “the southern U.S. remaining in the 80s to 90s, locally 100s over Southwest deserts.”
Forecast
I tend to agree with the analysts from Bespoke. After traders claw back last week’s losses fueled by speculation due to the approaching storm, what is going to have to happen to drive prices higher?
Given current record production, short-term weather concerns should be enough to overcome a minor resistance range at $2.800 to $2.812.
However, we’re going to need to see a big jump in demand in order to overcome the main top at $2.859. The main trend on the daily chart will change to up on this move, however, right above it is a major retracement zone at $2.859 to $2.881.
This article was originally posted on FX Empire
