Natural Gas Fundamental Forecast – April 28, 2016

June Natural Gas futures rebounded from yesterday’s sharp sell-off to finish at $2.180, up $0.021 or 0.97%. After reaching its highest level since February 8 on Monday, the market has dropped significantly, perhaps signaling the end of its almost two-month rally.

This week’s weakness is being fueled by concerns about weak demand. Robust output and moderate indoor-heating demand has pushed the natural gas market into oversupply, with inventories standing nearly 50% above average levels for this time of year. However, weather-driven demand is expected to remain moderate in the coming two weeks, according to forecasters.

This market is likely to remain a weather driven market over the near-term. Last week, talk of above average temperatures in key demand areas led to increased bullish speculation while driving weaker shorts out of the market. This also led to speculation that the market could rebalance itself sooner-than-expected if an unusually warm spring turned into an unusually warm summer.

However, conditions changed and it looks as if spring temperatures won’t be that high after all. Taking out the warmer-than-normal spring is what triggered this week’s sell-off.

Chart-watchers cite the key support level at $2.129 must hold or the market could retrace all the way back to the $1.972 to $1.948 area. If it continues to hold as support then look for a range bound market over the near-term with a slight upside bias.

April 25 – May 1: Warm temperatures have set up over much of the central, southern, and eastern US with plenty of upper 60s to 80s, locally 90s over Texas. However, temperatures are cooler near the Canadian border and over the interior West where weather systems are tracking through with showers and thunderstorms.

Precipitation will increase this week over the northern US as weather systems coming out of the Rockies track across. Overall, this will bring slightly cool conditions to the northern US, while remaining slightly warmer than normal over the southern US, combining to drive near seasonal natural gas demand over the coming week.

Overall, much of the country will experience LOW natural gas demand, but locally MODERATE.

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.

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Natural Gas Weekly Update
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