Natural Gas Price Fundamental Daily Forecast – Traders Cautious Ahead of Midday Weather Forecasts

Natural gas futures are edging lower on Wednesday as new weather forecasts indicate a slight warming trend in some models. The market is trading inside yesterday’s range, which suggests investor indecision and impending volatility. Traders may be keeping their powder dry ahead of today’s midday forecasts.

At 12:44 GMT, March Natural Gas futures are trading $5.826, down $0.245 or -4.04%. On Tuesday, the United States Natural Gas Fund ETF (UNG) settled at $21.27, down $1.36 or -6.83%.

NatGasWeather Outlook

According to NatGasWeather, “As of midday Tuesday, the Global Forecast System model remained the coldest, but it shed a handful of heating degree days (HDD) to align better with the European model.”

Natural Gas Intelligence (NGI) reported the forecaster said the first in a series of frigid blasts is expected to sweep across the United States this weekend. Overnight low could plunge more than 10 degrees below zero across the northern half of the country and into the upper teens in Texas and the South.

NatGasWeather added that while the current forecasts would likely result in strong national demand, the data are not quite as cold as they had been. That said, the models remained impressively cold with an Arctic blast hitting the Lower 48 next Wednesday through Christmas Day (Dec. 21-25), that would send overnight temperatures in the Midwest and Plains more than 20 degrees below zero.

They cautioned, though, that trends once viewed as bullish late in the 15-day outlook have had the tendency to warm as they roll into the front of the forecast.

Traders Eyeing a Possible Freeport LNG Restart

Traders continue to look for clues as to when Freeport LNG may return to service. NGI reported on Tuesday that the natural gas exporter has targeted late December for a restart of its terminal on the upper Texas coast.

But some analysts, however, do not expect the Freeport plant to return until January, February or later because it will likely take federal regulators longer than Freeport to review and approve the plant’s restart.

Demand for gas will rise once the plant, which can turn 2.1 billion cubic feet per day (bcfd) of gas into LNG, returns to service.

Skipping Ahead to Next Week’s EIA Storage Report

Mobius senior analyst Zane Curry said on Tuesday the current forecast for next week carries the potential to deliver a storage withdrawal of more than 200 Bcf leading up to the Christmas/New Year holiday, according to Mobius. This has not happened since 2017. Only four withdrawals of 200 Bcf or more have been reported in the month of December in the past decade.

“This would also be something for the market to strongly consider, particularly if weather forecasts fail to give up the delivery of Arctic air before year end,” Curry said.

Daily Forecast

Trader reaction to $5.865 is likely to determine the direction of March natural gas on Wednesday.

Look for a downside bias to develop on a sustained move under $5.865. If this creates enough downside momentum then look for a possible plunge into a short-term retracement zone at $5.512 – $5.351.

The upside bias could get stronger on a sustained move over $6.113. This could trigger a surge into a retracement zone at $6.384 – $6.750.

Holding between $5.865 – $6.113 will likely lead to a choppy trade.

Look for the midday forecast to set the tone into the close.