Natural gas futures are trading lower early Monday after weekend forecasts predicted a weather pattern that would bring with it notably warmer-than-normal temperatures the first week in December.
Compared to Friday’s outlook, the largest change in temperature outlook occurred during the 11-15 day time frame, from December 2-December 6, according to Maxar’s Weather Desk.
At 14:11 GMT, January natural gas futures are trading $4.870, down $0.275 or -5.34%.
Maxar Weather Desk Looking for Warmer Temperatures
“The change is a result of a deeper trough over the eastern Pacific, alongside waning of the North Atlantic block,” the firm said in its latest forecast. ”This allows for a much warmer pattern for most of the U.S. and Canada, where bellows are limited to the East Coast at the start of the period.”
The forecast showed “widespread” above and much above normal temperatures over the western and central parts of the Lower 48 during this time frame, with the warmer conditions expected to “shift eastward over the course of the period,” Maxar added and Natural Gas Intelligence (NGI) reported.
NatGasWeather Outlook Concurs with Maxar Forecast
NatGasWeather similarly highlighted warmer trends for the December 1-7 time frame, when “almost the entire U.S.” is expected to see temperatures of around 10-30 degrees above normal.
“The focus this week is likely to turn to how long the coming warmer than normal early December U.S. pattern lasts, because the further into December it takes for blue weather maps to return, the more pressure it puts on bulls to reduce risk,” NatGasWeather said.
The technical chart pattern is also bearish at the start of the week.
The main trend is down. This down trend was reaffirmed early Monday when sellers took out the previous main bottom at $4.811. A trade through $5.480 will change the main trend to up, but don’t expect to see that unless the weather forecast turns bullish.
The main range is formed by the August 19 bottom at $4.009 and the October 6 top at $6.667. Its 50% and 61.8% retracement zone comes in at $5.338 to $5.024.
January natural gas futures are currently trading below this zone, making it resistance.
The daily chart shows there is no major support until $4.009 so don’t be surprised if we see an acceleration to the downside. It may take a steep break to flush out all of the weaker longs still hoping for the start of a weather market.
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This article was originally posted on FX Empire