Advertisement
Advertisement

Natural Gas Fundamental Forecast – January 18, 2017

By:
James Hyerczyk
Updated: Jan 18, 2017, 03:53 UTC

Natural gas futures retreated from a two-week high on Tuesday despite forecasts for colder temperatures at the end of January. March Natural Gas futures

NATURAL GAS

Natural gas futures retreated from a two-week high on Tuesday despite forecasts for colder temperatures at the end of January.

March Natural Gas futures closed at $3.405, down $0.053 or -1.53%.

Forecast

Once again, it was a combination of technical and fundamental factors that controlled the price action. Technically, the market ran into resistance following a test of a short-term retracement zone at $3.469 to $3.554. This zone is 50% to 61.8% of the last break from $3.828 to $3.110.

The zone will remain resistance until it is taken out and this is not likely to occur unless the weather turns cold in January and into early February. If $3.554 is taken out with conviction, we could see a surge into $3.685. On the downside, the support zone is $3.296 to $3.170.

Daily Natural Gas
Daily March Natural Gas

Fundamentally, we have the weekly storage report and the weather forecasts to deal with in the meantime. This week’s storage report is expected to show a drawdown of about 225 billion cubic feet in the week-ended January 13. Last week’s draw was 151 Bcf in the preceding week, 178 Bcf a year earlier and a five-year average drop of 170 Bcf.

According to the U.S. Energy Information Administration, natural gas in storage currently stands at 3.160 trillion cubic feet, 10.3% lower than levels at this time a year ago and close to 0.1% below the five-year average for this time of year.

Natgasweather.com is currently predicting natural gas demand will be low to very low the next 7-days. Based on the price action, it looks as if investors are already betting on a bullish weather report after that. We’ve seen this before at the start of January so investors are being a little cautious about pushing prices too far ahead of the forecasts.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement