Natural Gas Fundamental Analysis, April 28, 2017

Natural gas prices retreated on Thursday after the previous day’s strong surge failed to attract new buyers. As mentioned yesterday, the rally on Wednesday was likely related to the expiration of the May futures contract and probably did not represent true buying.

June Natural Gas futures finished the session at 3.239, down $0.032 or -0.98%.

Prices were also pressured on Thursday after the release of the weekly U.S. Energy Information Administration’s inventories report showed a bigger-than-expected build. According to the EIA, natural gas in storage rose 74 billion cubic feet for the week-ended April 21, exceeding analysts’ expectations for an increase of about 70 Bcf.

The EIA report also showed that stockpiles increased more than usual for this time of year, 14.1% below levels from one year ago but 15.8% above the five-year average.

Forecast

At this time of year, weather is going to play the most important role in the direction of the market. According to natgasweather.com, overall natural gas demand will be moderate into next week. It’s going to be cool in the west-central U.S. with highs of 40s and 50s, to drive light late season demand. We could also see rising temperatures in some parts of the country that could lead to increased cooling demand.

This week’s chart pattern basically shows the situation traders are facing at this time.

Holding between $3.120 and $3.274 should produce a sideways trade which will indicate investor indecision.

A sustained move over $3.274 will indicate that buyers are regaining control, while a break under $3.120 will mean that the selling pressure is increasing.