Decode forex platform alert: Bears tighten control as weather forecast warms

Monday (December 16) US market time,Decode Forex PlatformAlert U.S. natural gas futures fell sharply and opened with a downside gap as bearish fundamentals weighed on the market. Production remains high, with Wood Mackenzie forecasting 103.80 billion cubic feet per day on Monday. While this figure is slightly lower than last Friday's 104.70 billion cubic feet per day, it is in line with the most recent seven-day average and underscores ongoing oversupply concerns. Traders remain cautious about the market's upside potential as production has not been significantly affected.

Warmer weather reduces heating demand

The bearish sentiment was heightened by weekend weather updates, with major forecast models showing a warming trend. According to NatGasWeather, the GFS model showed 26 heating degree days (HDDs) of warming, indicating a significant reduction in heating demand in the near term. Initially, the ECMWF model tended to be colder, but its overnight update reversed markedly, reducing heating degree days (HDDs) by 19, closer to the GFS forecast. This strengthened expectations of weaker demand in the coming days.

Between December 16 and 22, high pressure will dominate the southern and eastern United States, with mild high temperatures of 60-70 degrees Fahrenheit in most southern states and 40-50 degrees Fahrenheit in the Northeast. While the cooling and heating system will advance toward the Northwest and Rocky Mountains, demand will remain very low until Friday. As cold air moves through the Great Lakes and eastern regions, there could be a brief spike in heating demand over the weekend, with highs of 20-30 degrees and lows of 10-20 degrees.

technical analysis

Natural gas 01 day chart

From a technical standpoint, natural gas futures are approaching key support areas. The 50-day moving average at $3.090 and the Fibonacci support at $2.993 are key levels that traders are monitoring. A decisive breakout of these points could trigger further declines to $2.836 and possibly a seasonal low of $2.588.

On the plus side, resistance remains strong. The 200-day moving average at $3.372 is the first resistance level, with additional resistance in the $3.444-3.647 area, where prices have struggled to sustain gains.

Short-term outlook: bears maintain control

With warmer weather forecasts, reduced heating demand in the near term and high production levels, natural gas futures are under continued downward pressure. According to NatGasWeather, prices are likely to test lower support levels in the near term unless the cold trend re-emerges or production decreases. Traders should keep an eye on weather model updates and production trends for potential changes in market direction.

At 02:12 Beijing time, U.S. natural gas was reported at $3.224/million British thermal, down 1.70%.