November Gas Is Breaking Below the Summer Lows

November natural gas futures are falling hard Wednesday, breaking through the late-summer bottoms as the warm weather trade takes over the nearby contract. The front month is below $2.90, and the bids that held the market together earlier this month are gone.

The weather maps are not giving November a reason to turn. Commodity Weather Group expects warmer-than-normal temperatures across the eastern half of the United States through November 3. The market is losing heating demand at the wrong time for the nearby contract.

The weather forecast stayed warm, and the front month broke.

At 14:19 GMT, November natural gas futures are trading $2.840, down $0.123 or -4.15%.

The Nearby Contract Is Trading the Weather, Not Winter

The Super El Niño story is picking up headlines, but that is a winter trade. November does not have time for winter. The maps are warm, demand is fading, and expiration is running out the clock.

Traders watching December can afford to wait for a colder forecast. November longs cannot. The calendar has turned against them and the weather models are not giving them any room.

The break through $3.00 brought attention to the round number. The move through $2.90 was different. That level had held several times since August. Sellers took it out and kept going.

January natural gas remains below $4.00, and the winter strip is starting to draw interest from buyers. Persian Gulf LNG restrictions and tighter overseas storage are keeping the deferred contracts from falling with November. Two different trades in the same market. The front month is selling off on its own weather. The winter strip has enough demand-side support to hold a bid. That split is not closing anytime soon.

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Daily November Natural Gas Futures Technical Analysis

November natural gas futures are trading sharply lower early Wednesday. Sellers have been pounding the market all week after crossing to the bearish side of the 50-day moving average at $3.063. This level is new resistance.

The main trend is down according to the daily swing chart. The nearest main tops are at $3.334 and $3.395, making a change in trend unlikely from current price levels. The downtrend was reaffirmed earlier today when sellers took out three swing bottoms at $2.912, $2.902, $2.896, and the long-term swing bottom at $2.839. Each breakdown reaffirmed the downtrend.

The next downside target is the swing bottom at $2.676.

Daily December Natural Gas Futures Technical Analysis

December natural gas futures are selling off hard for the sixth session in a row. The intense selling pressure started with a closing price reversal top at $3.652 on October 14. It accelerated to the downside after the market crossed to the bearish side of the 50-day moving average at $3.474 last Friday.

The main trend is also down according to the daily swing chart. It was reaffirmed earlier today when sellers took out the swing bottom at $3.234. The nearest swing tops are $3.652 and $3.709. The nearest downside target is $2.896.

What to Watch

For November natural gas futures, my bias remains to the downside. It’s being supported by the breakdown under the 50-day moving average and the downtrend on the main swing chart. Counting the October 14 main top at $3.334, the market has been down six-out-of-seven sessions. This means that on Thursday, it will be in the window of time for a closing price reversal bottom. This formation and a subsequent confirmation could soften my bearish outlook.

For December natural gas futures, the breakdown under the 50-day moving average and the breakdown under the swing bottom at $3.234 are providing the best support for my downside bias. Due to the current prolonged break in terms of price and time, on Thursday we will enter the window of time for a closing price reversal bottom. If formed and confirmed, we could see a strong counter-trend rally. This would weaken my outlook slightly.

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