Past few weeks have been quite bearish for Natural Gas
prices. This year seems to be a disaster for Natural Gas suppliers due to
oversupplied market and warmer temperatures.
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| Natural Gas Production - Generatebucks |
Short term Weather forecast
Based on the Natgasweather, the weather forecast for this
week suggest rain and snow showers in the East today with highs of 30s to 50s
for stronger demand. The central and southern US will be mild the next few days
with highs mostly in the 40s to 60s, but then warming late week with 50s to 70s
gaining increasing for light demand. The West will see a mix of mild and cool
areas with only local showers. Strong high pressure will build back over the
East late in the week with temperatures again warming well above normal and
into the 40s to 70s. Overall, moderate national demand Tue-Wed, then back to
very light Thur-Sun, averaging out to LOW.
Clearly fundamental for the natural gas prices push them
towards red zone.
Supply situation
There is an abundance of natural gas as Americans have drilled
17% more this past year than they did the previous one. With this supply
situation, prices struggle to gain any momentum. It is highly unlikely that we
could see a significant rally this season.
Natural Gas prices forecast
Looking at current fundamentals, I would, quite frankly, suggest staying
away from the market until we see any rally. We are trading in an oversold zone and with dull fundamentals, prices are expected to
decline. We might see a rally in coming days but that might only trigger more short
positions.
For any reasonable trade, one should wait for a rally before
they enter this market. It is sensible to create a short position at small
rallies for short term. Holding any bullish position in this market will not be
advisable.
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