Yahoo News Natural Gas Price Fundamental Daily Forecast – Weak Longs Being Shaken Out
Natural gas futures are trading sharply lower on Friday with a milder or bearish short-term weather pattern likely behind the selling pressure. There wasn’t much of a change in the fundamental picture on Thursday.
Liquefied natural gas (LNG) demand remained steady but a little below the numbers seen earlier in the week. Thursday’s government storage report came in low enough to relieve some of the storage concerns. Therefore, there must be a problem with the weather forecasts. Or traders could just be positioning themselves ahead of next week’s expiration of the November futures contract, which is supposed to be the source of heightened volatility.
At 11:48 GMT, December natural gas futures are trading $3.204, down $0.068 or -2.08%.
US Energy Information Weekly Storage Report
The EIA reported Thursday that domestic supplies of natural gas rose by 49 billion cubic feet for the week ended October 16. On average, supplies were expected to climb by 51 billion cubic feet (Bcf) for the week, according to analysts polled by S&P Global Platts.
Total stocks now stand at 3.926 trillion cubic feet (Tcf), up 345 Bcf from a year ago and 327 Bcf above the five-year average, the government said.
According to NGI, “A Bloomberg survey of eight analysts estimated injections to range from 46 Bcf to 56 Bcf, with a median build of 52 Bcf. Reuters polled 14 analysts, whose estimates ranged from increases of 42 Bcf to 56 Bcf, with a median injection of 52 Bcf. The Wall Street Journal surveyed 12 analysts whose estimates fell within that same range, but arrived at a median build of 52 Bcf. NGI’s model also projected 52 Bcf.
Short-Term Weather Outlook
According to NatGasWeather for October 23-29, “Cold air continues across the Rockies and Plains with chilly lows of -0s to 30s. Much of the West and East Coasts will be comfortable with highs of 60s to 80s besides locally hotter 90s over the Southwest.”
“Cold air over the Northern Rockies & Plains will push into Northern Texas today and spread across the Midwest/Great Lakes and east-central U.S. this weekend into next week with lows of 10s and 30s for a swing to stronger national demand.”
“The East will remain mild to warm until late next week when cooler air will finally arrive to drop highs into the 40-50s. Overall, national demand will increasing to high.”
Short-Term Outlook
Short-term support is $3.177 to $3.133. But the key area to watch is $3.133 and the last main bottom at $3.132. If this price fails to hold as support then we could see a clean break to $3.014 to $2.929.
Traders shouldn’t fear a price collapse this close to the start of the winter heating season, however. It will probably create the next major buying opportunity. We’re seeing steady LNG demand and the hedge funds are long. I think that all bullish traders are waiting for is the expiration of the November futures contract and the return of colder weather.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
