Natural Gas Fundamental Analysis, April 24, 2017

June Natural Gas futures are called higher early Monday which is a surprise. On Friday, the market took out a key bottom at $3.198 so traders were expecting the selling pressure to continue.

Short-term traders have been pressuring the market for about two weeks because of concerns over low demand. We’re going through the time of the year where demand is a major worry because temperatures aren’t cold enough to generate increased demand for heat nor is it hot enough to lead to increased demand for air conditioning.

The current chart pattern on the daily chart indicates the trend is down. The main range is $2.817 to $3.422. If the selling pressure continues then we are likely to see a move into its retracement zone at $3.120 to $3.048. This is a value zone so I expect to see investors return on a test of this zone.

The direction of the market over the near-term is also likely to be determined by hedge fund and commodity fund investors. They are holding on to huge positions. If they decide to liquidate then look for the selling to extend into $3.120 to $3.048. If they decide to add to their long positions then we could see a retracement of the recent sell-off.

As far as the weather is concerned this week, natgasweather.com says “Weather systems will impact the Southeast and North the next few days with showers and cooling, combining to drive slightly stronger than normal gas demand.”

“The south-central U.S. to southern Great Lakes will be quite mild with highs of 60s to 80s, although a touch hot over South Texas with 90s.”

“As the week progresses, warm high pressure will build over the East with highs of 70s to upper 80s, locally 90s driving modest early season demand for cooling. Next weekend will remain warm/hot over the southern and eastern U.S. and cool over the west-central U.S.”

“Overall, natural gas demand will be moderate.”

The upgrade to moderate demand may be the reason for the higher opening early Monday.