Natural Gas, NOAA Forecast, Technical Outlook – Talking Points
- Natural gas selloff sees relief on updated temperature outlook
- Price action in NG futures still down nearly 20% for November
- Technical picture gives little support for bulls, cold weather needed
The recent selloff in natural gas futures found some relief after dropping nearly 12% last week. Price action pushed above the August high on an updated NOAA temperature outlook for the next two weeks. Warmer temperatures are still seen in the northern and western portions of the United States.
However, forecasts for below-average temperatures over the next 8-14 days across the southeast up to the Ohio Valley are a bullish driver for the gas. This is in contrast to what has been warmer than average temps seen throughout the entire continental US over the last ten days.
NOAA 8-14 Day Outlook Temperature Probability
Despite forecasts prompting an uptick in natural gas futures this week, price action remains nearly 20% lower for November. This loss follows a sharp build up in price from the late summer months. This is somewhat a seasonal occurrence as supply and demand drives price action going into the winter months. Still, the volatility as of late can be attributed, at least in part, to factors resulting from the Covid pandemic.
The technical outlook on natural gas, however, appears fragile. The 50-day simple moving average is directly below the current daily candle which may provide some short-term support. Outside of that, there does not seem to be a clear technical path higher for bulls. For now, price may find the most benefit on lower than expected temperatures as we move into December.
Natural Gas Futures Daily Price Chart
Chart created with TradingView