Natural Gas Fundamental Forecast – April 21, 2016

June Natural Gas futures continued to find support early Thursday, jumping to its highest level since February 12 before falling back shortly before the New York opening. Early in the session, the market rallied to $2.210 before it ran into sellers. It is currently trading at $2.184, down 0.004 or -0.18%.

The early session rally was follow-through buying tied to Tuesday’s strong surge. The biggest one-day rally in more than three months on Tuesday was tied to hope that U.S. gas production is slowing and forecasts for cooling temperatures.

The market is also gaining support from the sharp decline in oil-rig counts in the U.S. which have fallen more than 70% in the past year. Natural gas is a by-product of shale oil production, and the drop in the number of oil rigs is beginning to reduce gas production as well.

The price action on the charts and the fundamentals appear to be strengthening, but there doesn’t seem to be any urgency to get long at this time, which may explain the market’s slow assent. Traders believe the next move will be technical in nature because the market has entered what is known as the “shoulder” season between winter and spring when producers usually begin adding to inventories. The late spring cooler weather is also helping to raise hopes that inventories won’t continue so oversupplied.

Technical analysts have identified $2.219 as a potential breakout point for the market. Taking out this level could force some of the weaker shorts out of the market, leading to a potentially explosive rally. On the downside, a sustained move under $2.196 will indicate the return of hedge selling pressure. This could lead to a continuation of the sideways market.

April 20 – April 26: A Spring storm remains stalled over the eastern Rockies and Plains with showers and thunderstorms that are spreading into the Great Lakes and eastern US. It will remain warm over the southern US with highs of 70s and 80s, while still quite mild fairly far up the East Coast. Slight cooling will arrive with showers from a weather systems providing glancing blows of cooler air and showers across New England, this weekend and again next week. The West will be warm and dry with high pressure dominating until this weekend when Pacific systems return with showers and cooling. Overall, besides cooler temperatures over the upper Great Lakes and New England, it will be quite comfortable across the country for near to lighter than normal demand through this weekend. Overall, much of the country will experience LOW natural gas demand.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

WEEKLY

Natural Gas Weekly Update
Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)

Weekly Natural Gas Storage Report
Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)