Natural Gas: Weather Patterns Could Tilt Price Trend Soon

On Thursday, despite the announcement of weekly natural gas inventory, showing a build-up of 44 Bcf, which was larger than the expectation for build-up of 39 Bcf but was smaller than the 5-year average of +45 Bcf, Futures showed a bumpy move and tried to test the psychological resistance at $9.

No doubt this was a steep move after a breakout above $8.541, but the bears came out of their den above $8.988 to thrash the bulls and forced them to run speedy to find shelter at their immediate base at $8.5.

On Friday, futures are trying to defend their base at $8.5 as the natural gas bulls look ready to buy dips above the “Launching Pad” at $8.064.

Undoubtedly, the closing level of this week indicates the influence of the changing weather outlook for this weekend as the Great Lakes and East will remain with showers and highs of 60s to 80s.

The West, Texas and plains will be under hot high pressure through early next week with highs of upper 80s and 100s, although with cooling over the plains and Texas late next week.

The weather patterns for the next 8 to 15 days expected to be cooler than normal over much of the US besides the West will bring larger builds, potentially larger than normal, which could lead to highly bearish price movement for futures.

Technically speaking, in a monthly chart, futures continued to struggle to sustain above $8.9 but found selling sprees above $9 since May. In June, futures hit a new peak at $9.664 but witnessed sharp selloff. In July, stiff resistance was felt at $9.4 – followed by selling.

In August, natural gas tried to maintain this customary move during the first half could find it difficult to sustain above $8.989 due to the thick presence of big bears above the psychological resistance at $9.

Finally, the changing weather pattern could tilt the price pattern highly bearish during the second half of the August this year.

Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk; as Natural Gas is one of the most liquid commodities of the world.