Natural Gas Outlook
A two-week short-covering rally triggered a surge in March 2015 Natural Gas futures, but a change in the fundamentals and a strong technical price level ended any hope of a return to prices levels not seen since late June, early May and late February.
March Natural Gas futures jumped a little over 22% from October 27 to November 10 on expectations the colder-than-normal temperatures hitting key demand areas in the East Coast and the Midwest would linger into the start of the official winter season in December. Temperatures may have dropped last week, but the way natural gas came off its high at 4.461, it doesn’t look like speculators believe this year’s winter will equal or exceed last year’s deep freeze.
Traders will have to get used to these sudden, short-term spurts because it looks as if a potentially bullish longer-term forecast for extremely cold, lingering temperatures doesn’t exist at this time. Because of this, the upside potential for the market appears to be limited this winter.
Last year at this time, speculators were able to buy natural gas futures and hold on for the duration of the winter season because the “polar vortex” created a longer-term, seasonal buying opportunity. This year, however, the current longer-term forecasts are predicting periods of intense cold, but nothing to suggest the frigid temperatures would remain for the duration of the winter season.