Natural Gas Forecast: Mixed Performance Amid Weather Forecasts, Storage Report

Highlights

• Natural gas futures display mixed performance after previous session’s reversal.
• Weather models project high national demand followed by a weekend decrease.
• Fluctuating prices around $2.70 as bears gain advantage, driving prices down.

Overview

Natural gas futures are showing a mixed performance on Thursday following a sharp reversal down in the previous session. Traders are closely evaluating the impact of the current weather forecast on demand as they anticipate the U.S. Energy Information Administration’s (EIA) weekly storage report, which was delayed by a day due to the U.S. holiday on Tuesday.

According to NatGasWeather, both the GFS and EC weather models project high national natural gas demand in the coming days, followed by a decrease over the weekend as weather systems move across the Midwest and East. A hot weather pattern is expected from July 12-20, with potentially very high demand as temperatures rise into the upper 80s to 100s across much of the U.S. However, there are some cooler risks to consider. Over the past week, natural gas prices have been fluctuating around $2.70, but bears gained an advantage this morning, driving prices down from $2.79 to $2.67.

Looking at the forecast for July 6-12, NatGasWeather predicts hot high-pressure conditions in the southern, western, and eastern U.S., with temperatures in the 90s to 100s, leading to strong demand. The Midwest will experience more comfortable temperatures as a weather system brings showers and highs in the 70s to 80s. Additional weather systems are expected to track across the Midwest and interior Northeast in the following week.

Despite forecasts for hotter-than-normal weather and increased gas consumption by power plants, particularly in Texas, U.S. natural gas futures displayed a mixed performance on Wednesday.

In conclusion, natural gas futures are experiencing a varied trading performance influenced by weather forecasts and the anticipation of the weekly storage report. Traders are closely monitoring demand projections amid changing weather patterns across the country. The market remains sensitive to supply and demand dynamics, and any fluctuations in prices are likely to be driven by these factors in the short term.

Technical Analysis

Natural Gas is currently displaying  bearish sentiment as prices hover near the upper boundary of the main resistance area. The current price of 2.678 is lower than the previous 4-hour close of 2.699, indicating a negative relationship.

Additionally, the price is below the 50-4H moving average of 2.734, further reinforcing the bearish sentiment. The 200-4H moving average at 2.486 is a potential downside target. With the 14-4H RSI reading at 42.50, below the neutral zone, there is a slight bearish bias. Traders should exercise caution and monitor price movements for potential further declines.