Natural Gas Price Fundamental Daily Forecast – Uncertain Weather Forecasts Keeping Lid on Prices
Natural gas futures are trading lower on Monday after giving up earlier gains. The market opened higher after forecasts over the weekend predicted colder temperatures over the near-term. Gains were erased after buyers failed to support the early session short-covering rally. Traders said there was just too much uncertainty surrounding the weather to drive old short-sellers out and attract new speculative buyers.
At 15:17 GMT, March natural gas futures are trading $1.894, up $0.024 or +1.28%.
Short-Term Weather Outlook
According to NatGasWeather for January 27 to February 2, “Several weather systems will impact the US this week, although none frigid. One will exit the Midwest and Northeast Monday with rain and snow showers ending. A second milder system will track across the Southeast, while a third impacts the West. Additional mild systems will impact Texas, the South, & West mid and late week. Overall, highs will be in the 30s to 50s across the northern US, locally 20s, with 50s to 70s across the southern US. With frigid air retreating into Canada, national demand will be lighter than normal the next 7 days.”
According to Bespoke Weather Services, “As the dust settles, we find our forecast a little colder compared to Friday, but with increased uncertainty beyond the start of next week,” the forecaster said. “Some model runs have shown a weakening” of the positive Eastern Pacific Oscillation (EPO), “which would open the door to getting some cold into the pattern, but there is not much consistency in this idea right now.”
Bespoke went on to say that the European dataset has been warmer overall but “is actually showing the most weakening of the EPO out in the 11-15 day, so we do allow for some colder than normal conditions in the middle of the nation, but not yet into the East.”
Maxar’s Weather Desk saw colder changes compared to late last week for the period Saturday through February 5, including along the East Coast in the early half of this time frame.
Further out in the February 6-10 time frame, Maxar was forecasting a “pattern in transition.”
“Models have been volatile in the details of the transition, and confidence is on the lower side of average as a result,” Maxar experts said. “The composite averages near normal, but in the details are early aboves in the Rockies shifting southward. Belows are from the Northwest to North Central late.”
EBW Analytics Group sees, “much warmer than normal” through February 6, with the February 7-13 period expected to see temperatures “returning to the normal range.”
“Ensemble model members, though split nearly 50/50 as to the most likely solution during the period starting around February 5, with an unusually large range of outcomes between much warmer than normal to much cooler.”
Daily Forecast
We’re looking for a sideways to lower trade until all the models agree on colder temperatures. Technically, taking out $1.957 could trigger a short-covering rally with $2.033 the first upside target.
This article was originally posted on FX Empire
