Natural Gas Price Fundamental Daily Forecast – Speculators Betting on Cold Temps to Emerge December 26-30

U.S. natural gas futures are edging higher on Wednesday after a two-day setback on renewed forecasts calling for the return of colder temperatures over the next two weeks. The news is contributing to this week’s volatile trade that showed the market trade higher on Monday due to cooler forecasts and then lower on Tuesday after updated forecasts reduced some of the cooler expectations.

At 13:44 GMT, March natural gas futures are trading $3.730, up $0.111 or +3.07%.

Are we entering a weather-driven market? Too early to tell, but we do know traders are supporting the market early Wednesday on weather related changes despite potentially bearish near record U.S. output, a decline in U.S. Liquefied Natural Gas (LNG) exports this week, a 4% slide in European gas prices and forecasts calling for less U.S. demand next week than previously expected.

Short-Term Weather Outlook

According to NatGasWeather for December 15-20, “One Pacific storm will track through the Rockies, while a second slams into the West Coast, with both rain, snow and chilly highs of 10s to 40s.

However, the rest of the U.S. will be much warmer than normal as strong upper high pressure rules with highs of 40s to 60s from the Midwest to the Northeast and 60s to 80s over the southern U.S.

National demand will increase this weekend into the start of next week as a cold system tracks across the northern U.S. with highs of 10s to 40s, although mild to warm over the southern ½ of the U.S. with highs of 40s to 70s.

Overall, national demand will be very low through Friday, then moderate this weekend.”

Output on the Rise

Data provider Refinitiv said output in the U.S. Lower 48 states has averaged 96.53 billion cubic feet per day (bcfd) so far in December, just shy of November’s monthly record of 96.54 bcfd.

Daily Forecast

Technically, the main trend is down. A trade through $3.503 will signal a resumption of the downtrend with potential targets coming in at $3.430 and $3.186. The market is in no position to change the main trend to up.

The minor trend is also down. However, a trade through $3.941 will change the minor trend to up. This will shift momentum to the upside.

Today’s price action will be determined by trader reaction to a minor pivot at $3.722.

On the upside, the major resistance zone is $3.964 to $4.378.

The midday forecasts could set the tone today with traders mostly focused on temperatures for December 26 -30. Unless the midday weather data shows colder trends during this time period, we could see further weakness.