Natural Gas Price Fundamental Daily Forecast – Stubborn Counter-Trend Bulls Defending $2.132

Natural gas futures are trading higher early Monday as stubborn bulls continue to hold on to hope for perhaps a late summer rally. At the same time, short-sellers seem to be unwilling to squeeze as much profit as they can at current price levels. Perhaps they’re letting the market rally so that they can re-short at more favorable price levels.

At 10:18 GMT, October natural gas is trading $2.185, up $0.029 or 1.35%.

On Friday, natural gas futures closed in a position to challenge the contract low at $2.045. However, short-sellers have had a hard time breaking through a technical level at $2.132 that seems to be fiercely defended by aggressive counter-trend buyers.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported last week that domestic supplies of natural gas rose by 59 billion cubic feet for the week-ended August 16. Analysts were looking for an increase of 61 billion cubic feet. Total stocks now stand at 2.797 trillion cubic feet, up 369 billion cubic feet from a year ago, but 103 billion below the five-year average, the government said.

Broken down by region, the Midwest injected 31 Bcf, while the East added 26 Bcf. Small builds were seen in the Mountain and Pacific region, and the South Central posted a net 4 Bcf withdrawal after salt facilities withdrew 9 Bcf and nonsalts injected 5 Bcf, according to EIA.

Short-Term Weather Outlook

According to NatGasWeather for August 26 to September 2, “Comfortable conditions will continue across the Midwest, Northeast, and Mid-Atlantic regions as weather systems sweep through every few days with showers for light demand. The West into Texas will be hot with highs of 90s and 100s as high pressure dominates for strong regional demand. Some cooling will spread into portions of the South/Southeast Wednesday through Thursday, briefly cooling highs into the upper 80s. Overall, national demand will be moderate across the central and northern US but high over the West into Texas and the South.

Weekly Forecast

Technical factors seem to be driving the price action early Monday with buyers once again finding support at a short-term retracement zone.

From the top down, the main range is $2.510 to $2.045. Its 50% to 61.8% retracement zone at $2.278 to $2.332 is the primary upside target and potential resistance.

The intermediate range is $2.338 to $2.045. Its retracement zone at $2.191 to $2.226 is likely to be tested today. It provided resistance last week.

The short-term range is $2.045 to $2.273. Its retracement zone at $2.159 to $2.132 has been providing support since mid-August.

Given the downtrend, sellers could return on a test of $2.191 to $2.226. Overcoming $2.226 will indicate the short-covering is getting stronger. This could trigger a move into $2.273. Taking out this top will change the main trend to up.

On the downside, taking out $2.132 with conviction could finally trigger the steep break that everyone has been waiting for with the main bottom at $2.045 the primary target.

Perhaps that’s the problem…everyone is waiting for a steep sell-off.