Natural Gas Price Forecast – Natural Gas Markets Rally Again

The natural gas markets have shown themselves to be resilient again during the trading session on Tuesday, as the market has broken above the 50 day EMA. This of course is a psychological barrier, and it is worth noting that we still have a gap above that needs to be filled. That gap is at roughly the $3.00 level, so therefore I think a lot of people will be aiming for that level. Above there we could go looking towards the $3.20 level, possibly even as high as the $3.40 level to revisit the recent high.

NATGAS Video 25.11.20

Now that we have filled the huge gap from several weeks ago, buyers are willing to jump in and pick this market up. It makes quite a bit of sense considering that the contract that futures are trading right now is the January month, and that of course is one of the busiest months of the year for demand as northern hemisphere residents will be looking to heat their homes. We are looking at colder temperatures coming down the road, so that of course puts a bit of a floor in the natural gas markets as well.

All things being equal, I believe that this is a market that will give us an opportunity to take advantage of these cheaper prices for the short term, as the cyclical trade is so well known. At this point in time I still believe in “buying the dips” but recognize that natural gas can be rather thin at times, so therefore the market is prone to erratic trading. Keep in mind that this is Thanksgiving week so volumes will drop off.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Rebound on Colder Weather Forecast

Natural Gas prices moved higher on Monday, rebounding 2.72%, as colder than expected weather is expected to cover most of the south for the next 2-weeks. There is one storm in the Atlantic that has a 10% chance of turning into a tropical cyclone but it’s not expected to impact any natural gas infrastructure. Demand rose in the latest week.

Technical Analysis

Natural gas prices moved higher on Monday and are poised to test the 10-day moving average at 2.80. Support is seen near the November lows at 2.52. The RSI turned higher, reflecting decelerating negative momentum. Medium-term momentum is negative to neutral as the fast stochastic is printing in the red with a rising trajectory which points to consolidation.

Natural Gas Demand Rising

Demand rises because of heating demand in buildings. Total U.S. consumption of natural gas rose by 22.8% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation rose by 2.6% week over week. In the residential and commercial sectors, consumption climbed by 81.9% with temperatures across the Lower 48 states generally averaging between 40 and 60 degrees Fahrenheit. Industrial sector consumption increased by 5.8% week over week.

Natural Gas Price Forecast – Natural Gas Shows Signs of Support

Natural gas markets initially gapped higher but then pulled back to fill that gap. By doing so, we ended up turning around to form a supportive looking candlestick, where it looks like we are ready to go higher. At this point, the 50 day EMA is just above and could cause a little bit of resistance but ultimately I do think that eventually we break above there as the trend is most decidedly to the upside and we have just filled a major gap on the chart.

NATGAS Video 24.11.20

If we break above the 50 day EMA, then we will go looking towards the gap just above the $3.00 level, and perhaps even break above there. At this point in time, the market then goes looking towards the $3.20 level, which is a scene of resistance. All things been equal though, I do believe it is only a matter of time before we break to the upside and continue to go towards the $3.40 level. That is the most recent high, and we obviously will see some resistance, so I do think that we are looking at a scenario where we are going to retry that due to the fact that the contract that traders are looking at right now in the futures market is the January contract which of course is a major demand season for natural gas.

Obviously though, as we get away from the winter months, we will start to see sellers again. Having said that, it certainly looks at this point in time that we still have at least one more leg higher given enough time.

For a look at all of today’s economic events, check out our economic calendar.

Climate Iceberg Threatening International Shipping Lines

International media has been obsessed with the possible negative impact on the environment of hydrocarbon producers, but has forgotten to take on one of the world’s most vital but also polluting sectors, international shipping.

The International Maritime Organization (IMO), based in London and responsible for setting global environmental standards for shipping, has put in place a possible iceberg decision that could easily sink some of the international shipping “Titanics”. The IMO has last week approved rules designed to curb the industry’s carbon emissions, even that environmental agencies and NGOs criticized the organization by stating that its measures won’t do enough to help tackle climate change.

International shipping is one of the world’s most undervalued sectors, as it is transporting 90% of total global physical trade. At the same time, mainly due to the use of rather unclean sources of fuel, the sector is also spewing out as much CO2 as France and Germany combined each year. With its new regulations the IMO steps up its efforts to improve the shipping vessels’ carbon efficiency and footprint.

With a strong message, the IMO has now put in place a 50% emissions reduction target by 2050. The targets are green, but as some international shipping organizations, such as the Danske Rederier, already warned the measures will not be applicable and reach the set targets. As Maria Skipper Schwenn of Danske Rederier said, “the regulations are a stumbling block for a real transition to carbon neutrality because they don’t reward ships for performing well”.

The IMO measures are meant to hit not only its 40% reduction target for 2030, but increase the total level for 2050. Where main criticism of the sector is that vessels already have achieved most of the set savings, as since 2008, which is the goal’s baseline year, ships have gotten bigger, better designed and slowed down, meaning much of the required savings have already been achieved. Taking this into account, most of the former targets were in reach for 2030.

The real risk or target at present is the fact that now overall shipping emissions need to be cut. Having more efficient ships, as is increasingly the case, will not reach these targets anymore, not due to the vessel emission, but mainly due to evergrowing and booming international trade and transport. If the IMO would like to comply with the the Intergovernmental Panel on Climate Change (ICPP)’s 1.5 degrees Celsius scenario, man-made CO2 output needs to almost halve, versus 2010, by 2030. This will include an outright cut of vessel emissions.

Analysts agree that if the IMO wants to reach 50% cut in greenhouse gas emissions by 2050, almost the total fleet need to switch to zero-emission fuels. The latter is a fairy-tale as they don’t exist at present on commercial scale. In a statement made by the Global Maritime Forum, it is assessed that this would cost around US$1 trillion in investments.

Regulatory demands will be supporting this, as the EU already is expected in 2021 to propose rules to put a price on emissions from shipping, likely by bringing maritime transport into its emissions trading scheme. . Several large players, such as Maersk Tankers and commodities trading giant Trafigura, are supporting the latter approach already. It however is not expected that the IMO will soon put in place the same legislation. Some new legislation is expected from the IMO in June 2021.

NGOs, activist investors and governments however are now threatening a new kind of approach, based on the “Divest Hydrocarbon Fuels” approach. Warnings have already been given that inn light of the success reached with oil and gas companies, activists are planning to target international shipping lines and owners.

This will not reach the same impact as with oil and gas, but the threat of divestment from banks and finance companies supporting global shipping, could be a real crisis scenario. International maritime trade and shipping both are heavily dependent on large banks and ship insurers that provide low cost financing to shipping companies.

If now parties are able to force them to include environmental conditions to the requirements or costs, survival of several giants is at stake. Scenarios are already discussed between shareholders, NGOs and activists, that a list of potential targets, such as Berkshire Hathaway, Blackrock, Bridgewater Associates, Goldman Sachs, Nordea, Bank of America Merrill Lynch, are targeted. These financial giants all have positions in shipping and shipping finance.

The world now has the highest concentration of carbon dioxide in over 800,000 years, which has triggered major shifts in ices ages and life on the planet in the past

One of the largest divestment activist groups, Carbon Disclosure Project, said that already the threat of disclosure works. Companies, investors and especially institutionals, are likely to take action. Via disclosure, companies or organizations, such as the IMO, will act as they are confronted by failure. Until now, international maritime operators have been able to get away with it. If now the focus of groups like Carbon Disclosure Project, 350.org and others, is going to be on shipping, there will be a shock to the system.

CDP already has been producing damning reports, showing that with only 60,000 major ocean-going ships, global shipping makes up 33% of global freight emissions (1 billion tons compared to 3 billion tons of global carbon emissions from transportation). In its global report, CDP targeted 2604 companies to disclose carbon emissions in 2019. Only 110, or less than 5%, that disclosed were transport operator or logistic providers.

The lack in transparancy and levels of disclosure is maybe seen by companies as their own business, but could now backfire and become costly if investors and insurers become reluctant to finance any longer. It becomes even more a threat to maritime providers when realizing that 40% of global shipping is used to transport fossil fuels, while all are using fossil fuels. To be hit from both sides would have sunk Titanic much quicker even.

The lack of urgency in the global maritime sector is amazing. With the current approach, based on the current assessment, less than 10-15 companies will be able to get through the discussion without scars.

Sea Freight accounts for one third of all carbon dioxide emissions, despite only having 60,000 large vessels

40% of global shipping is used to transport fossil fuels

A prioritization matrix by CDP highlighting risks from lack of disclosure and movement toward low carbon shipping

CDP has a detailed methodology for looking at the disclosure risks posed by each shipping company

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Consolidate Recent Losses

Natural gas prices consolidated on Friday after breaking down on Thursday following a larger than expected build in natural gas inventories. There are no storms in the Caribbean or Atlantic that are expected to turn into tropical cyclones. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to an NOAA forecast. This should continue to weigh on prices. LNG exports were unchanged.

Technical Analysis

Natural gas prices rose on Friday after breaking down on Thursday following a larger than expected build in natural gas inventories. Prices are poised to test the March lows near 2.63. Resistance is seen near former support near 2.75. Prices have rebounded out of the oversold territory. The RSI (relative strength index) is printing a reading of 32, after closing at 28 on Thursday, which could foreshadow a correction. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is printing a reading of 16, below the oversold trigger level of 20 which could foreshadow a correction.

LNG Exports were Unchanged

US LNG exports are flat week over week. Eighteen LNG vessels with a combined LNG-carrying capacity of 64 Bcf departed the United States between November 12 and November 18, 2020, according to shipping data provided by the EIA Two more tankers were loading on Wednesday, November 18—one at Freeport LNG terminal and one at Corpus Christi LNG.

Natural Gas Weekly Price Forecast – Natural Gas Finding Buyers

Natural gas markets have fallen during the bulk of the week, but turned around to recover quite a bit due to the fact that the market is still trading a January contract, despite the fact that we had warmer than typical temperatures forecasted over the next couple of weeks. Ultimately, this is a market that will continue to see a lot of buying pressures going forward, due to the fact that the colder temperatures almost certainly will be coming, as it is the midst of winter. The 200 week EMA sits just below, near the $2.60 level and therefore I think a lot of people will be paying attention to this pullback as a potential buying opportunity, at least for one more leg higher.

NATGAS Video 23.11.20

To the downside, if we were to break down below the $2.50 level, then the 50 week EMA starts to come into play near the $2.38 level. All things being equal, I do like the idea of buying dips in this market going forward, at least until we start trading spring contracts, which is several weeks away. Remember, futures markets look out into the future, not necessarily what is going on right this moment. This is probably one of the biggest mistakes that retail traders make, focusing on the now instead of the future. This is why the cyclical trade tends to end while it still very cold outside. Typically, that happen sometime in the middle of January. Between now and then, I am a buyer.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Recover on Friday

Natural gas markets rallied significantly during the trading session on Friday, as we have seen the $2.60 level offer a certain amount of support. Ultimately, the market closing at the top part of the candlestick also shows that there is real follow-through, as we had recently seen so much significant selling. After all, a lot of this was a reaction to short-term weather forecasts coming out the United States predicting warmer weather, but this is a short-term action, not something that you can follow-through with for a longer-term move. After all, temperatures during this time year tend to fall, that drives of demand. Because of this, I think that buyers will step in and try to pick up value.

NATGAS Video 23.11.20

Looking at the chart, the $2.81 level features the 50 day EMA, so breaking above that allows for an attempt to fill the gap from earlier this week. That means that we could go looking towards the $2.95 level, possibly the $3.00 level after that. I still believe that we are in a “buy on the dips” type of market, but the weather reports will of course continue to throw the market around. Natural gas has this nasty habit of being very erratic based upon the weekly weather report, so therefore it is very difficult to hang onto longer-term positions, especially this time of year.

That being said though, I still believe that we eventually go higher as we are still only trading the January contract in the futures market. Selling is not a thought, and even if we did break down, I would be especially interested in the $2.40 level where the 200 day EMA sits.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Bearish National Forecasts Pointing to Weak Heating Demand

Natural gas futures are trading higher on Friday after plunging to their lowest level since March 23 the previous session. Prices fell on Thursday on weak-weather driven demand and a bigger-than-expected storage build in yesterday’s government storage report. The outlook remains bearish with national weather forecasts pointing to weak heating demand over the near-term.

At 13:05 GMT, January natural gas futures are trading $2.793, up $0.073 or +2.68%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 31 billion cubic feet for the week-ended November 13. On average, the data were expected to show an increase of 22 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

According to Natural Gas Intelligence (NGI), “A Bloomberg survey found estimates ranging from a withdrawal of 9 Bcf to an injection of 26 Bcf, with a median of a 22 Bcf increase. A Reuters poll found estimates spanning from a pull of 22 Bcf to an increase to an increase of 27 Bcf and a median of a 19 Bcf injection. A Wall Street Journal poll, meanwhile, landed at an average injection of 10 Bcf, though estimates ranged from a decrease of 25 Bcf to an increase of 22 Bcf.”

“Though there is a gulf between low and high estimates, the midpoint of each survey calls for a modest increase, which would mark a departure from seasonal norms. The five-year average is a pull of 24 Bcf.”

“Energy Aspects issued a preliminary estimate for a 19 Bcf build. The firm pointed to warm weather during the week and estimated a 40% deficit in heating degree days for the week versus the 10-year average.”

“NGI model predicted a 23 Bcf injection for the report.”

Total stocks now stand at 3.958 trillion cubic feet, up 293 billion cubic feet from a year ago, and 231 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for November 20-26, “Much of the U.S. will be warmer than normal today through the weekend with highs of 40s to 60s across the western and northern U.S. besides the colder Northern Plains with 20s and 30s. The southern U.S. remains very nice with highs of 60s to 80s as high pressure rules. A quick cold shot with rain and snow will sweep across the Midwest early next week, cooling highs into the 30s and 40s for a modest bump in national demand. Overall, national demand will be low.”

Daily Forecast

We’re likely to continue to see downside pressure or at best sideways price action until production starts to fall, economic activity increases and stronger energy demand returns. This doesn’t mean we won’t see periodic short-covering rallies like the one we’re experiencing on Friday.

Traders can and will book profits despite the bearish fundamentals in an effort to shake out the weaker shorts while setting up the market for better shorting opportunities at higher prices.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Tumble Following Larger than Expected Inventory Build

Natural gas prices broke down on Thursday following a larger than expected build in natural gas inventories. There is one storm in the Caribbean that has a zero percent chance of becoming a tropical cyclone during the next 48-hours according to NOAA. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to an NOAA forecast. This should continue to weigh on prices.

Technical Analysis

Natural gas prices broke down declining nearly 4% on Thursday following a larger than expected build in natural gas inventories. Prices are poised to test the March lows near 2.63. Resistance is seen near former support near 2.75. Prices are oversold. The RSI (relative strength index) is printing a reading of 28, below the oversold trigger level of 30, which could foreshadow a correction. The fast stochastic is printing a reading of 8, below the oversold trigger level of 20 which could foreshadow a correction. Momentum is negative as the MACD (moving average convergence divergence) historical is printing in the red with a downward trajectory which points to lower prices.

Inventories Rise more than Expected

Natural gas in storage was 3,958 Bcf as of Friday, November 13, 2020, according to the EIA. This represents a net increase of 31 Bcf from the previous week. Expectations were for a 14 Bcf build. Stocks were 293 Bcf higher than last year at this time and 231 Bcf above the five-year average of 3,727 Bcf. At 3,958 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Continue to Fall On Warmer Temperatures

Natural gas markets have broken down a bit during the trading session on Thursday, breaking below the $2.60 level based upon warmer than anticipated temperatures towards the end of the month. However, the reality is that we are heading towards the coldest time of year and there will be more demand. Because of this, I am waiting for buying opportunities and we just do not quite have one yet. That being said, I see a couple of different areas underneath that will be interesting to pay attention to, but I should point out that I will be making a buying decision based upon a daily close, not a specific price.

NATGAS Video 20.11.20

Looking at the $2.40 level, I see a lot of previous support from not only a gap and a hammer, but also the fact that the 200 day EMA is currently sitting in that area as well. That acts as a natural magnet for longer-term traders, so therefore I think there could be a bit of upward pressure in that area. The size of the candlestick is somewhat telling, and it suggests that we will in fact continue to go lower for the short term. That being the case, I look at this as a possible value play given enough time. In this situation, the best thing I can tell you to do is simply sit on the sidelines and wait for your opportunity. You do not have it yet, but I will check this at the end of every day.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Down as Traders Brace for Rare Injection of About 24 Bcf

Natural gas futures are trading lower on Thursday shortly before the release of the government’s weekly storage report. Today’s early selling took out the June and July bottoms, bringing the market closer to a freefall situation. Mild temperatures continue to weigh on prices with forecaster NatGasWeather predicting a continuation of the bearish pattern.

At 12:30 GMT, January natural gas futures are trading $2.746, down $0.092 or -3.24%.

“Bigger picture, the coming pattern still is to the bearish side due to national HDDs being below normal most of the of the next 15 days and the December 1-2 period still showing a mild overall U.S. set-up,” NatGasWeather said.

Short-Term Weather Outlook

According to NatGasWeather for November 19-25, “After being chilly in recent days, the Great Lakes and Northeast will warm into the 40s to 60s. The southern U.S. remains nice with highs of 60s to 80s, while the West will be unsettled as weather systems bring rain, snow, and highs of 30s to 50s. Much of the U.S. will warm above normal this weekend but then with the Midwest cooling off into the 30s and 40s early next week as a weather system tracks through. Overall, national demand will be low.

U.S. Energy Information Administration Weekly Storage Report

The EIA is scheduled to release its weekly storage report at 15:30 GMT on Thursday. Last year, the government report showed a 66 Bcf withdrawal for the period.

According to Natural Gas Intelligence (NGI), “A Bloomberg survey found estimates ranging from a withdrawal of 9 Bcf to an injection of 26 Bcf, with a median of a 22 Bcf increase. A Reuters poll found estimates spanning from a pull of 22 Bcf to an increase to an increase of 27 Bcf and a median of a 19 Bcf injection. A Wall Street Journal poll, meanwhile, landed at an average injection of 10 Bcf, though estimates ranged from a decrease of 25 Bcf to an increase of 22 Bcf.”

“Though there is a gulf between low and high estimates, the midpoint of each survey calls for a modest increase, which would mark a departure from seasonal norms. The five-year average is a pull of 24 Bcf.”

“Energy Aspects issued a preliminary estimate for a 19 Bcf build. The firm pointed to warm weather during the week and estimated a 40% deficit in heating degree days for the week versus the 10-year average.”

“NGI is modeling a 23 Bcf injection for the report.”

Daily Forecast

Although analysts anticipate withdrawals to resume with next week’s EIA report, concerns about hefty storage levels linger.

We’re likely to continue to see downside pressure or at best sideways price action until production starts to fall, economic activity increases and stronger energy demand returns.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Fail to Recapture Resistance Ahead of Inventory Report

 

Natural gas prices attempted to move higher but were unable to gain traction above support levels. Hurricane Iota, is now a post-tropical depression, and will not impact any natural gas installations. The weather is expected to move much warmer than normal over the next 6-10 and 8-14 days, according to NOAA which is weighing on natural gas prices.

Technical Analysis

Natural gas prices edged higher but were unable to recapture resistance near prior support near 2.83. Support is seen near the June lows at 2.63. The RSI has moved lower but stabilized after pushing through the oversold trigger level of 30. The fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 8, well below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Supply Declines

According to data from the EIA, the average total supply of natural gas fell by 2.4% compared with the previous report week. Dry natural gas production decreased by 0.7% compared with the previous report week. Average net imports from Canada decreased by 31.9% from last week.

Natural Gas Price Forecast – Natural Gas Remains Sluggish

Natural gas markets have found themselves extraordinarily exhausted during the trading session on Wednesday as we tried to rally but gave back the gains. By doing so, the market looks very likely to continue to see a lot of back and forth, perhaps in an attempt to try to build a base. After all, even though we have warmer temperatures coming to the United States in the short term, it is only a matter of time before winter stepped back up and starts freezing everyone again. Quite frankly, it is cold right now.

NATGAS Video 19.11.20

With that being said, the demand for natural gas will continue to pick up as we go into the season, and it should be noted that we are in the midst of getting close to the rollover from December to January contract, which is typically a very bullish time of year. As long as winter is relatively cold, that should eventually drive demand up and then send this market higher over the longer term. This is the cyclical trade every year, at least until we start trading spring contracts. We are not near that yet, so I still have an upward bias even though the candlestick for the trading session on Wednesday was less than desirable.

Perhaps technical trading came into play near the 50 day EMA but I think if we can break above the highs of the Wednesday session, it is very likely that we will go towards the $2.96 level to fill the short term gap above that kicked this move off.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Early Short-Covering Rally Ahead of Thursday’s EIA Report

Natural gas futures are trading higher on Wednesday shortly after the regular session opening which probably means one of the weather services introduced colder temperatures into their recent bearish forecasts. The news is not likely a trend changing event, but it is enough to shake the tree a little and chase out a few of the weaker shorts.

At 13:07 GMT, January natural gas futures are trading $2.902, up $0.058 or +2.04%.

NatGasWeather Short-Term Weather Outlook

According to NatGasWeather for November 18 to 24, “Chilly conditions continue across the Midwest and Northeast with lows of 10s to 30s for moderately strong national demand. Demand would be stronger if not for the southern U.S. quite nice with highs of 60s to 80s. Weather systems with heavy rain, snow, and wind will crash into the West Coast with mild to cool highs of 30s to 50s. After the Northeast system exits today, much of the U.S. will become warmer than normal Thursday – Sunday with highs of 40s to 60s North, and 60s to 80s South for light national demand. Overall, moderate demand through Wednesday, then low.”

US Energy Information Administration Weekly Storage Report

The EIA reported last Friday that domestic supplies of natural gas rose by 8 million cubic feet for the week-ended November 6. On average, the supply data, which were delayed by a day this week due to Wednesday’s Veteran’s Day holiday, were expected to show a decline of 4 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.927 trillion cubic feet, up 196 billion cubic feet from a year ago, and 176 billion cubic feet above the five-year average, the government said.

Preliminary forecasts point to another increase for the week-ended November 13.

Bespoke Weather Services said, “Supply/demand balances continue to run strong enough so that it would be supportive if only we did not have the high-end warm pattern in place.”  Because of the comfortable temperatures, “the balance is not as tight as it had been, with last week’s EIA report as well as projections for this week’s number both indicating some loosening due to weaker weather-adjusted power burns and some uptick in production.”

Daily Forecast

While not particularly bullish news, the introduction of some weather-related demand is providing support even if it is only short-covering. Technical factors could also be contributing to the early strength since most conventional indicators are in oversold territory.

The nearest resistance is a 50% to 61.8% retracement zone at $3.006 to $3.053. Since the main trend is down and the near-term fundamentals still bearish, sellers would likely reemerge on a test of this zone. However, we may not even get there today unless there is a drastic shift to colder temperatures in the forecast.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Slip, but Hold Support Despite Warmer Weather Forecast

Natural Gas prices continued to slide on Tuesday but were able to find support. Demand should come under pressure as the weather is expected to be warmer than normal for most of the United States for the next 2-weeks. Hurricane Iota was downgraded to a tropical storm after hitting Nicaragua and is not expected to hit any US natural gas infrastructure. Demand fell, driven by lower building consumption.

Technical Analysis

Natural gas prices fell on Tuesday but found support near the June lows at 2.64. Resistance is seen near a downward sloping trend line that was prior support near 2.83. The RSI has moved lower but stabilized after pushing through the oversold trigger level of 30. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Demand Declines

Demand falls, driven by lower building consumption, setting new November daily low. Total U.S. consumption of natural gas fell by 14.6% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 4.9% week over week. In the residential and commercial sectors, consumption declined by 34.6%, reaching a low of 12.5 Bcf on Saturday, the lowest November level since at least 2006. Industrial sector consumption decreased by 3.7% week over week.

Natural Gas Price Forecast – Natural Gas Markets Trying to Stabilize

Natural gas markets have had a relatively quiet trading session on Tuesday, but at this point in time that is exactly what the market needs, some sense of stability. The market is hanging around the $2.70 level, and at this point in time it is likely that the buyers will come back in and try to take this market higher. The 50 day EMA above could be short-term resistance, but at this point in time I think that the market will eventually break above there and continue going towards the $3.05 level.

NATGAS Video 18.11.20

Looking at this market, it is simply a matter of finding stability and perhaps even a supportive candlestick that you can take advantage of. After all, we are in the busy time of year for natural gas distribution, and therefore demand. I think it is only a matter of time before we go looking towards the 3.00$ level again, and I also recognize that there is plenty of support all the way down to at least the $2.40 level where the 200 day EMA is starting to hang out.

The 200 day EMA of course does attract a lot of longer-term attention, and at this point in time with warmer temperatures coming down the road here in the next few days, it could give you an opportunity to pick up “cheap natural gas” for the seasonal trade. After all, it is only a matter of time before cold weather comes back into the picture. Shorting is not a thought that I have right now, and now I am simply looking for a supportive candlestick to take advantage of.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Market Pricing in Another Increase in Weekly Stockpiles

Natural gas futures are trading lower on Tuesday after hitting its lowest level since July 24 earlier in the session. The daily charts indicate there is still room to the downside with $2.785 the next major target, however, yesterday’s “gap and go” price plunge may have put the market into oversold territory, suggesting it may be ripe for a short-covering rally if the sellers decide to let up on the downside.

At 13:28 GMT, January natural gas futures are trading $2.849, down $0.015 or -0.52%.

On Monday, prices plummeted in reaction to bearish weather patterns after Bespoke Weather Services said the forecasts over the weekend were “decidedly” bearish, with demand dropping compared to Friday’s expectations.

NatGasWeather Short-Term Weather Outlook

According to NatGasWeather for November 17 to 23, “A cold shot will track across the Midwest and Northeast today and Wednesday with chilly lows of 10s to 30s for a swing to stronger national demand. The southern U.S. remains nice with highs of 60s to 80s, while weather systems with rain and snow continue into the Northwest with mid highs of 30s to 50s. After the Northeast system exits Wednesday, much of the U.S. will become warmer than normal Thursday-Monday with highs of 40s to 60s North, and 60s to 80s South for light national demand. Overall, moderate demand through Wednesday, then low.

US Energy Information Administration Weekly Storage Report

The EIA reported on Friday that domestic supplies of natural gas rose by 8 million cubic feet for the week-ended November 6. On average, the supply data, which were delayed by a day this week due to Wednesday’s Veteran’s Day holiday, were expected to show a decline of 4 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.927 trillion cubic feet, up 196 billion cubic feet from a year ago, and 176 billion cubic feet above the five-year average, the government said.

Daily Forecast

In addition to the bearish weather forecast, NatGasWeather noted that the Lower 48 production increased from about 86 Bcf to 89 Bcf over the past few days.

Analysts are also expecting another increase in gas stockpiles for the week-ended November 13, followed by withdrawals after that.

The nearby futures contracts are expected to remain under pressure until there is a sudden cold snap in December. However, the deferred contracts could benefit if the weather turns cold enough in December and beyond.

EBW analysts are pointing to strong export demand and the likelihood of tighter balances over the winter months to give next year’s futures contracts a boost.

“The storage surplus that has persisted all year long is likely to quickly dwindle,” EBW said.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Fall on Warm Weather Forecast

Natural gas prices broke down on Monday, as warmer than normal weather is forecast to cover most of the United States for the next 2-weeks. Hurricane Iota is in the Caribbean but is unlikely to make its way to the Gulf of Mexico. The Energy Information Administration forecasts lower production in 2020 compared to 2019.

Technical Analysis

Natural gas prices broke down on Monday, pushing through support near an upward sloping trend line that comes in near 2.82 which is now seen as resistance. Support is seen near the July lows at 2.65. The relative strength index (RSI) has turned lower, which reflects accelerating negative momentum. Medium-term momentum is also negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices.

EIA Forecasts Lower Production in 2020

The EIA forecasts that U.S. dry natural gas production will average 91.0 Bcf per day in 2020, down from an average of 93.1 Bcf per day in 2019. In the forecast, monthly average production falls from a record 97.0 Bcf per day in December 2019 to 87.0 Bcf per day in April 2021 before increasing slightly. EIA forecasts dry natural gas production in the United States to average 87.9 Bcfper day in 2021.

Natural Gas Price Forecast – Natural Gas Markets Gapped Lower

Natural gas markets have gapped lower to kick off the week on Monday to show signs of weakness yet again. Ultimately, there is still plenty of support underneath though, and at this point in time it is likely that we will continue to see noisy behavior. After all, the time year is typically bullish for natural gas as demand picks up. Given enough time, is very likely that the buyers will step into this market, perhaps near the $2.60 level and most certainly near the 200 day EMA underneath. This time of year is going to continue to be bullish given enough time, because given enough time there should be demand picking up again.

NATGAS Video 17.11.20

That being said, you need to see some type of supportive candlestick in order to get involved, and we have plenty of time to think about the possibility of another leg higher. I think we will get that given enough time, but you need to be patient and wait for an opportunity to do so. Ultimately, if we can break above the gap lower on Monday, that would be an extraordinarily bullish sign and send this market much higher. I do not have any interest in shorting this market anytime soon, but once we start trading some of the springtime contracts, then I would be very interested in doing so. That being said, I think this is a market that continues to be noisy, so therefore you need to be very cautious. Given enough time, I do think we have reasons to go long but I will have to look at this on a day-to-day basis.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Down Sharply on Bearish Weather Outlook, EIA Injection Estimate

Natural gas futures gapped lower on Monday and the selling intensified after the regular session opening, driving the market through the November 9 main bottom at $2.965 and putting the July 20 bottom at $2.785 in clear view of sellers. The price plunge came as the latest forecasts lowered weather-driven heating demand expectations and signaled that mild temperatures could reach into early December.

At 14:10 GMT, January natural gas futures are trading $2.950, down $0.172 or -5.51%.

Bespoke Weather Services Outlook

Weather data was “decidedly” bearish trending over the weekend, with forecast demand dropping compared to Friday’s expectations, according to Bespoke Weather Services.

Models showed a “strong” positive Eastern Pacific Oscillation (EPO) at the end of the month that signals “what is increasingly likely to be a warm to very warm start to December,” the forecaster said. “…In order to weaken the positive EPO signal, we need to see a meaningful shift in tropical forcing eastward away from the Indian Ocean/far West Pacific. So far, we do not see signs of this, but it is something that will take time to occur.

NatGasWeather Short-Term Weather Outlook

According to NatGasWeather for November 16 to 22, “A cold shot will track across the Midwest and Northeast Monday – Wednesday with rain and snow and chilly lows of 10s to 30s for a swing to stronger national demand. The southern U.S. remains warm with/highs of 60s to 80s, while weather systems with rain and snow continue into the Northwest with mid to cool highs of 30s to 50s.

After the Northeast system exits Wednesday, much of the U.S. will become warmer than normal Thursday – Sunday with highs of 50s – 60s North and 60s to 80s South for light national demand. Overall, moderate demand through Wednesday, then low.”

US Energy Information Administration Weekly Storage Report

The EIA reported on Friday that domestic supplies of natural gas rose by 8 million cubic feet for the week-ended November 6. On average, the supply data, which were delayed by a day this week due to Wednesday’s Veteran’s Day holiday, were expected to show a decline of 4 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.927 trillion cubic feet, up 196 billion cubic feet from a year ago, and 176 billion cubic feet above the five-year average, the government said.

Daily Forecast

The hits just keep on coming for a market that just two weeks ago showed a record number of long futures and option positions. The selling could even extend into next week based on the comments from analysts at Tudor, Pickering, Holt & Co (TPH).

They are looking for another net injection for this week’s U.S. government storage report as “old man winter remains tardy.” The firm issued a preliminary estimate for a 20 Bcf injection.

“Friday’s build wasn’t unusual from a seasonality perspective, as six of the last seven years have reported builds for the corresponding week, but this week’s build would represent a material departure from norms of minus 46 Bcf,” the TPH analysts said.

For a look at all of today’s economic events, check out our economic calendar.