Natural Gas News: Capped by Technical Resistance Ahead of EIA Storage Report

Natural Gas Market Outlook

Ahead of today’s anticipated government storage report, U.S. natural gas futures are seeing a downward trend. With the market poised to test the crucial 50-day moving average at $1.961, a significant trend indicator since late January, traders are gearing up for potential volatility.

At 13:23 GMT, Natural Gas is trading $1.831, down $0.054 or -2.86%.

EIA Report Projections

The focus is on today’s EIA weekly storage report, expected to reveal whether market balance has tightened or loosened. Current forecasts suggest a build ranging from +8 to +15 Bcf, which is slightly below the 5-year average of +24 Bcf. This lighter build is attributed to cooler-than-normal temperatures in regions like the Midwest, Northeast, and California, balanced by warmer conditions elsewhere. A build of +13 Bcf is the consensus expectation.

Wall Street Journal Insights

Analysts’ views, as surveyed by The Wall Street Journal, point to a modest increase in U.S. natural-gas inventories, with an estimated rise of 11 Bcf to 2,270 Bcf. This figure is less than the five-year average injection for the same week, suggesting a slight decrease in the surplus storage that ended the heating season 39% above average.

Global Geopolitical Factors

The natural gas market is also reacting to global events, particularly the recent attacks on Ukrainian gas storage facilities by Russia. These attacks have driven up gas prices in Europe and underscored the fragility of energy infrastructure in conflict zones.

Weather and Demand Outlook

The NatGasWeather forecast for April 11-17 indicates a series of weather systems across the U.S., with mild to warm temperatures prevailing. This pattern points to a reduced demand for natural gas in the immediate future.

Short-Term Market Forecast

Given the expected below-average inventory build, coupled with geopolitical tensions and a forecast of mild weather, the short-term outlook for the natural gas market leans bearish. The upcoming EIA report is likely to trigger market fluctuations, particularly with respect to inventory levels and reactions in the European market due to geopolitical uncertainties.

Technical Analysis

Natural gas futures are edging lower on Thursday after changing the short-term trend to up earlier in the week. A trade though $1.746 will change the short-term trend to down.

The key level to watch today is the 50-day moving average at $1.961. With the intermediate trend down, look for sellers on the first test of this trend indicator. However, overcoming it would shift sentiment and could fuel an acceleration to the upside.