Natural gas prices experienced a wide price swing today but managed to sustain a gain, with the contract for February settlement on the New York Mercantile Exchange currently at $3.281, up 0.34%.
Price action has been volatile this week as traders remain focused on weather forecasts. On Monday, prices fell as weather forecasts kept getting progressively warmer. On Tuesday, forecasts for cold weather later this month sent prices soaring.
Today, according to natgasweather.com, by the last week of January, cooling could arrive into the east-central US, which will be important to end bearish weather sentiment as the next 12-13 days will simply be awful for mid-winter demand. With the market already perhaps discounting the current warm weather pattern, the bias in natural gas over the near term could remain to the upside.
Today’s intraday high tested and failed resistance at the $3.358 level, representing the highs established in the latter part of last week’s trading. A break above these highs would provide more solid evidence that a temporary bottom has been established. On a failure to get above these highs, a return to the recent low cannot be ruled out.
That low stands at $3.098. The next level of support below this level is at the bottom of the November 18-21 gap at $3.028. Below this level the next support stands at the November 16th low at $2.891.
Tomorrow, the next Natural Gas Inventories report will be released at 10:30 ET.