Natural Gas Price Forecast – September 9, 2020

Author: Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

Natural Gas Near-Term Technical Analysis and Outlook

The near-term outlook for natural gas remains bearish after challenging support at $2.34 when prices fell to $2.328 today. This is a relatively important area of support because it is the intermediate (1.382) target of the first wave down from $2.743 and the 38 percent retracement of the rise from $1.700. Even so, the subsequent move up from $2.328 forms a bearish pennant that should break lower tomorrow.

Natural Gas - Complex Head and Shoulders on $0.035 Kase Bar Chart
Natural Gas – Complex Head and Shoulders on $0.035 Kase Bar Chart

Closing below $2.33 (adjusted from $2.34) will clear the way for $2.28. This is another potential stalling point because it is the larger than (1.618) target of the first wave down from $2.743 and the equal to (1.00) target of the primary wave down from $2.743. As discussed in yesterday’s update, settling below $2.28 might initially be a challenge, but odds for this are increasing.

The one caveat headed into tomorrow is that natural gas has not settled below the $2.40 neckline of the complex head and shoulders pattern. Prices settled at exactly $2.40 yesterday and $2.406 today. This is not too concerning but is something to watch during the next few days. Should natural gas rise above $2.45, look for a test of $2.50. This level is expected to hold. Key resistance and the barrier to a bullish near-term outlook is $2.60.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil Short-Term Price Forecast

WTI crude oil fell as called for in this week’s Kase Commentary on Crude Oil but has reached the crucial $36.0 objective much faster than anticipated. The $36.0 objective is split between the $36.11 larger than (1.618) target of the primary wave down from $43.78 and the $35.94 38 percent retracement of the rise from $23.26. Meeting this objective so quickly signals that a much deeper test of support than previously expected may unfold. However, because the move down stalled at $36.13 today, a test of resistance is expected first.

WTI Crude Oil – $0.35 Kase Bar Chart

Based on the small wave up from $36.13, WTI should rise to at least $37.4 and likely $38.1 early tomorrow. These are the equal to (1.00) and larger than targets, respectively. The $38.1 level is also today’s midpoint and is expected to hold. Rising above this will call for key resistance at $39.4. This is the highest the wave up from $36.13 projects and is near today’s open. Closing above $39.4 is doubtful but would call for $40.0 and possibly higher and signal that the corrective move down might already be complete.

Once $37.4 is met, odds for another test of support around $35.9 will increase. Falling below $36.36 will invalidate the wave up from $36.13 that calls for $37.34 and higher. This would also call for a test of $35.9, a close below which will clear the way for $35.0 and lower.

Brent Crude Oil Short-Term Price Forecast

Brent fell as expected but has challenged the $39.1 objective sooner than predicted. Nonetheless, odds favor a continued decline and a move below $39.4 will call for $38.8 and lower.

That said, the move down stalled just above the crucial $39.1 area and the wave up from $39.31 implies that a test of $40.3 and probably $40.9 will take place first. Resistance at $40.9 is expected to hold. Key Resistance is $42.1, a close above which will clear the way for $43.0 and higher.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold Technical Analysis and Near-Term Outlook

Gold is trading in a narrowing range that forms a coil pattern. Coils reflect indecisiveness and are not the most reliable patterns. Even so, they generally break in the direction of the prior move, in this case, down.

Gold - Coil on $15 Kase Bar Chart
Gold – Coil on $15 Kase Bar Chart

Today’s decline to $1927.2 challenged the lower trend line of the coil and fulfilled the smaller than (0.618) target of the wave down from $2024.6. This is bearish and suggests that the move down should continue to the $1888 equal to target. This is in line with the smaller than (0.618) target of the primary wave down from $2089.2. Settling below $1888 will call for a more significant decline.

Nevertheless, the move up to $2001.2 earlier in the week fulfilled the smaller than target of the wave up from $1874.2. This wave positive because this wave connects to $2059 and higher. The coil pattern may be building a bullish base, but until gold settles above $2001, the near-term outlook will continue to lean bearish.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural Gas Near-Term Outlook

Natural gas confirmed an intra-day head and shoulders reversal pattern by settling below $2.50 today. The pattern’s target is $2.26, which is also in line with the larger than (1.618) target of the primary wave down from $2.743. The connection to $2.26 is made through $2.42 and $2.34. The $2.34 objective is crucial because this is the most confluent target on the chart and is the 38 percent retracement of the rise from $1.700.

Natural Gas - Head and Shoulders on $0.025 Kase Bar Chart
Natural Gas – Head and Shoulders on $0.025 Kase Bar Chart

For the five-wave move up from $1.700 to have any chance at extending again and reaching its $2.81 objective $2.34 must hold. At this point, holding $2.34 for more than a day or two is doubtful. It now looks as though the five-wave trend has ended and that a large three-wave correction is underway. Settling below $2.34 will confirm this.

The move down has been somewhat choppy for the past few days. This suggests the decline is corrective. Even so, resistance at $2.57 is expected to hold as the move down extends. Key near-term resistance is $2.63. This is the 62 percent retracement of the decline from $2.743, a close above which would call for a test of $2.68 and then $2.73. Settling above $2.73 would clear the way for a push to challenge $2.81.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil Short-Term Price Forecast

The outlook for WTI crude oil continues to lean negative. WTI settled below the 200-day moving average for the fourth straight day after another early test of resistance. This has formed long upper shadows on the daily candlesticks for the last three days, all of which form shooting star. Granted, shooting stars within a range-bound market are not as reliable as those that form after a long uptrend, but they still reflect near-term weakness.

Nevertheless, WTI settled back above the 20-day moving average today and is still trading in the upper half of the Bollinger Bands, which are squeezing again. There is also a bullish coil that formed on the intra-day charts for the past few days.

WTI Crude Oil – $0.35 Kase Bar

The near-term call remains a challenge, but odds still favor an eventual break lower. Closing below $42.3 will clear the way for the key objective at $41.5. This is a highly confluent wave projection and the 50-day moving average. Settling below $41.5 will confirm a break lower out of the Bollinger Bands and clear the way for a much deeper correction before the move up eventually continues.

Conversely, prices have risen a bit after today’s settle, so there is a good chance for a test of $43.3 first. This is the smaller than (0.618) target of the wave up from $42.56 and connects to $43.8. This level is expected to hold. Key resistance and the barrier for a near-term bullish outlook is $44.2. Settling above $44.2 would be a strong indication that a much larger move up is underway.

Brent Crude Oil Short-Term Price Forecast

Brent crude oil settled back above the 20-day moving average today, but the waves down from $46.54 continue to call for a deeper test of support. Falling below $45.0 will open the way for at least $44.2. This is in line with the 50-day moving average and the $44.17 swing low. Settling below $44.2 would strongly indicate that a much larger correction is beginning to unfold.

Trading will likely remain choppy for the near-term though. Resistance at $46.2 is expected to hold and $46.7 is key. Settling above $46.7, which is near the 200-day moving average and the 50 percent retracement of the decline from $66.15, would imply that prices have finally broken higher out of the upward sloping range. This would be quite bullish for the long-term outlook.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold Near-Term Outlook

The near-term outlook for December gold futures leans bearish. Gold initially rose to $1980 as expected today. However, this level, which is in line with the 62 percent retracement of the decline from $2024.6 and the 20-day moving average, held on a closing basis. Also, the subsequent move down from today’s $1987.0 high fulfilled the $1915 smaller than (0.618) target of the wave down from $2024.6. Therefore, odds favor a continued decline, and a move below $1915 will clear the way for $1891 and lower.

Gold - $10 Kase Bar Chart
Gold – $10 Kase Bar Chart

Nevertheless, trading has been erratic for the past few days. So far, the move up from $1914.7 has held the 38 percent retracement of the decline from $1987.0. However, should gold rise a bit higher first, look for resistance at $1961 to hold. Closing above this would shift near-term odds in favor of key resistance at $1997. This is the equal to (1.00) target of the wave up from $1908.4 and, more importantly, the smaller than target of the wave up from $1874.2. Settling above $1997 would call for gold to make a push for at least $2023 and likely higher next week.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural Gas Near-Term Outlook

Tomorrow’s outlook for October natural gas leans negative after confirming an intra-day double top that formed between the $2.658 and $2.654 swing highs. The double top was confirmed by today’s close below the $2.564 swing low and the pattern’s target is $2.47. Double tops like this one meet their target 64 percent of the time.

Natural Gas - Double Top on $0.015 Kase Bar Chart
Natural Gas – Double Top on $0.015 Kase Bar Chart

The decline will not likely last much longer because the move down from $2.658 forms a corrective wave in a larger scale five-wave uptrend. There is also immediate support at $2.50 that may prove to be a stalling point early tomorrow. This is in line with the larger than (1.618) target of the primary wave down from $2.658 and the 62 percent retracement of the rise from $2.424. Therefore, closing below $2.47 is doubtful. However, this would clear the way for a larger correction to challenge $2.39 and possibly lower.

Once the $2.47 target is met odds for a continued rise will increase. However, should $2.50 hold, look for initial resistance at $2.57, and then $2.61. Settling above $2.61 would strongly imply that the correction is complete and clear the way for $2.67 and higher.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil Short-Term Price Forecast

WTI crude oil rose toward the upper end of the range it has been trading in for the past several weeks. The crucial $43.4 target discussed in this week’s Commentary and yesterday’s update was challenged. This level held on a closing basis. However, WTI’s $43.35 settle was four ticks above the 200-day moving average. Therefore, the outlook leans positive headed into tomorrow.

There is immediate resistance near the $43.68 swing high, but the waves up from $39.0 and $41.33 now call for a test of $44.2. Settling above this will call for $44.6 and then $46.0.

WTI Crude Oil - $0.35 Kase Bar Chart
WTI Crude Oil – $0.35 Kase Bar Chart

That said, caution is warranted. The move up has been supported by the rise in product prices for the past few days, most specifically by gasoline. Gasoline had the least negative outlook coming into the week and has likely been driven higher because of supply fears caused by hurricane Laura. Even so, gasoline pulled back this afternoon and formed a long-upper shadow. This suggests its move up might be short-lived. Should gasoline continue to fall tomorrow, WTI will be hard-pressed to overcome $44.2. Therefore, gasoline, and to a smaller degree, diesel, will probably determine the direction of WTI during the next few days.

For WTI, falling below $42.7 will imply that a test of $42.2 support is underway. The $42.2 level is near the 62 percent retracement of the rise from $41.33, the smaller than (0.618) target of the wave down from $43.68, and the 20-day moving average. Closing below this would call for key support at $41.2. This is the equal to (1.00) target and 50-day moving average. Settling below $41.2 would clear the way for a much larger test of support before the move up continues.

Brent Crude Oil Short-Term Price Forecast

Brent rose to the top of its trading range and settled above the $45.6 level discussed in yesterday’s update. The move up is now in a position to break higher out of the range and reach $46.4. This is the smaller than (0.618) target of the primary wave up from $41.72 and is marginally below the 200-day moving average. Settling above $46.4 will clear the way for $46.9 and higher.

Nevertheless, as discussed for WTI, the degree to which Brent rises during the next few days (and possibly longer) will largely be determined by gasoline and diesel prices. Should they continue to fall, Brent’s move up will be short-lived.

For now, initial support at $45.1 will likely hold. Falling below this will call for $44.4, which then connects to key support at $43.5. Settling below $43.5 will clear the way for a much more significant downward correction before Brent’s move up continues.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold Near-Term Outlook

December gold’s move up today is most likely corrective of yesterday’s decline. Near-term odds continue to favor a larger move down because of the daily and weekly reversal patterns and signals that were confirmed during the pullback from the $2089.2 swing high. A move below $1942 early tomorrow will increase odds for challenging $1932 again. This is the 62 percent retracement of the rise from $1874.2, a close below which will call for $1907 and then the key objective at $1892. Settling below $1892 will call for a much more significant test of support before gold tries to rise again.

Gold – $10 Kase Bar Chart

Nevertheless, based on the intra-day waves up from $1928.9, there is a good chance for a test of $1975 and possibly $1988 before gold challenges $1932 again. Resistance at $1988 is expected to hold. Closing above this will call for $2011 and possibly $2022. The $2022 threshold is most important because this is the smaller than (0.618) target of the wave up from $1874.2. Settling above $2022 would imply that the corrective move down is most likely complete and that the move up will begin to extend toward new highs again.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural Gas Near-Term Outlook

The outlook for natural gas remains bullish because September’s move up from $1.583 is unfolding as a textbook five-wave trend the targets $2.75. The more recent rise from $2.085 forms a likely Wave 1/V that has broken down into five sub-waves that stalled at $2.465 yesterday. The decline from $2.465 is corrective and probably forms Wave 2/V. Settling above $2.48 will indicate that Wave 3/V is underway and would call for $2.55 and higher.

Natural Gas – Five-Wave Trend on a $0.03 Kase Bar Chart

Nevertheless, today’s hanging man and a confirmed daily bearish MACD divergence indicate a deeper test of support might take place first. Falling below $2.39 early tomorrow will call for $2.32. This level is expected to hold because it is the 38 percent retracement of the rise from $2.085. Settling below $2.32 will all for Wave 2/V to challenge $2.28 and possibly $2.23. For the five-wave trend to continue to unfold as expected $2.23 must hold.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.