Natural Gas price forecast – It is time to go short Natural Gas Markets?

Natural Gas prices have declined in recent trading sessions at MCX. There was hardly any upside at the start of the winter season. Traders aren’t very positive about the bullish trends and many hedgers have already crated their short positions. With warm weather patterns forecast, It is time to short Natural Gas?

Natural Gas price - Generatebucks

As per the technical charts and seasonal patterns, Natural Gas prices should have soared mid-November but we didn’t see any upside. Traders and long-terms investors were seen creating short positions based on the change in weather patterns.

Weather patterns

Earlier in the week, weather models were supportive with rising expectations for a cold December. Then the models shifted to milder before trending warmer. With Warmer or milder winters predicted, it is possible that most buyers will move out of the market. 

Quite frankly! These weather patterns have been tested earlier and lead to mild weather patterns. If this continues, we would hardly see any buyers this year in Natural Gas.

EIA report released on Wednesday

On Wednesday, EIA report released showed smaller than expected draw. The Energy Information Administration reported that natural gas in storage was 3,610 Bcf as of Friday, November 22, 2019. This represents a net decrease of 28 Bcf from the previous week. Expectations were for natural gas stockpiles to decline by 50Bcf according to survey provider Estimize. Stocks were 548 Bcf higher than last year at this time and 31 Bcf below the five-year average of 3,641 Bcf. At 3,610 Bcf, total working gas is within the five-year historical range. The trajectory has put stockpiles at the 5-year average.

Natural Gas price forecast

There is a huge Gap underneath which prices are yet to cover. A strong resistance is seen around 2.40 level in international market. I wouldn’t advise to short in this market yet until December end since cold patterns are expected after December 10th.

I would suggest to hold entering this market or hold your current buying positions since market would again see a rally and prices may climb back to 195-200.

This would be a risky trade considering current weather patterns and technical but charts does show an oversold zone and a spike indeed can be seen.

Trading tip

Hold your buy positions wih a Stop loss of 170 for positional traders. Short –terms traders can sell but can be a risky trade.

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