Fundamental

Flying in the face of fundamental and technical indicators, November natural gas futures ventured higher Tuesday to close at $7.123, up 31.7 cents on the day. December futures, which will soon take over the front month title, climbed 25 cents to settle at $8.315.

Despite fundamental support remaining weak for the most part, prices rose at nearly all points Wednesday. A few cases of flat numbers in the West were the exception to gains that ranged from a couple of pennies to around 15 cents. The largest upticks tended to be concentrated in the Midcontinent.

Plagued by an array of bearish fundamental and technical factors, the natural gas futures market continued a slow, methodical grind lower Tuesday as calculated scale-down, end-user buying matched up with commercial and speculative selling activity. After an early rally failed to attract much support, the September contract shuffled lower throughout the session to finish at $5.373, down a half-cent for the day.

Except for 90-degree-plus high temperatures in parts of the West, fundamental weather demand remained subpar in most markets Thursday. Yet cash prices managed to solidify and strengthen the mild rally that had begun the previous day.

Instead of “following the screen” strength of the previous few days, cash prices found weak fundamentals to be a more compelling influence Friday. Quotes dropped across the board by anywhere from a little more than a nickel to more than 40 cents. The largest declines tended to cluster in the West and Northeast, while most of the smallest ones were in the Gulf Coast.

With little consensus from either technical or fundamental factors, natural gas future prices chopped erratically sideways Tuesday within a 12-cent trading range. After gapping lower at the open in reaction to bearish short-term weather forecasts, the prompt month was bid steadily higher throughout much of the session as traders grew increasingly confident that Thursday’s storage data will be price-friendly.

A true shoulder-month sensibility began to assert itself again in the spot gas market Tuesday. Generally mild to seasonal weather across the West and South, forecasts of some moderation of the cold temperatures that opened the week in the Northeast, and the prior-day example of weakening energy futures led to price dips ranging from about a nickel to nearly a quarter.

Seeing little change in fundamental influences, Tuesday’s market was almost a repeat of the day before. Most points were again close to flat, with some ranging to a little more than a dime up or down. The primary difference was that softening trends showed up more often Tuesday.

The downtrodden energy markets are setting up for a meaningful improvement in the next few weeks, driven by several fundamental factors, including smaller natural gas injections and the potential for winter gas shortages, according to Raymond James analysts.