Natural Gas: Fall Season Matters More Than Lower Output or Australian Strike
Against a backdrop of shrinking gas rigs, output squeezes from operational disruptions, and an Australian labor strike that just refuses to end, natural gas prices have only moved 8.5% over the past week — remarkably little, considering the circumstances.
Yet something else is commanding much of the market’s attention and would be the driver of sentiment and price over the coming weeks: the approach of the fall, or autumn, season, which officially begins Sept. 23.
“As is often the case as autumn draws near, weather can trump all other factors,” trade journal naturalgasintel.com said in a post Wednesday.
NatGasWeather cautioned in the same post that cooler conditions looked set to snap the market’s climb from mid-$2 to $2.70 per million metric British thermal units, or mmBtu.
The forecaster noted that fall-like temperatures had settled in across the North, and Hurricane Lee, moving across the Atlantic and toward the East Coast Wednesday, was bound to deliver chilly conditions to the Northeast by the weekend.
Technically, gas prices look set to stay supported at current levels and could climb beyond $2.80 per mmBtu.
“The broad outlook is positive as potential rebound remains supported by the 50-day Exponential Moving Average of $2.62 and the weekly Middle Bollinger Band of $2.53,” said Sunil Kumar Dixit, a chartist for gas at SKCharting.com.
“Additional price action breakout is coming closer with the descending 200-day Simple Moving Average of $2.84 as first overhead resistance to be cleared. Stability above this zone opens way for the next leg higher with the monthly 100-SMA of $3.24.”
That price action will likely be decided as well by how storage of natural gas grew over the past week.
According to a Reuters poll
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