Natural Gas News: Energy Market Shaken by Oil Surge – Natural Gas Forecast Today

Natural Gas Edges Higher as Middle East Escalation Overshadows Weather and Storage

U.S. natural gas futures are slightly higher on Thursday as traders continue to react to the situation in the Middle East, which appears to be showing signs of escalating. The area of focus is the Strait of Hormuz, which is the key waterway Middle Eastern producers use to transport about 20% of the world’s LNG.

At 09:20 GMT, April Natural Gas is trading $3.258, up $0.049 or 1.53%.

Lockstep with Crude Oil

The market appears to be moving lockstep with crude oil prices. Early in the session on Wednesday, the IEA announced a record oil reserve release that failed to put expected pressure on oil and prices firmed. Natural gas followed a similar pattern before reversing to the upside.

Late Wednesday, the U.S. announced it would release oil from its own Strategic Petroleum Reserve (SPR), yet crude oil rallied even higher after the news. The U.S. release is expected to take 120 days, which is too long for crude oil traders apparently. Natural gas edged higher on the move.

Weather Takes a Back Seat

Analysts at NatGasWeather are focusing on the 15-day weather forecast which says we could see a jump in national demand over the next six days, then strong days 7-9. However, warm temperatures are expected to return March 20-24.

Nonetheless, weather and production are not the catalysts underpinning the market. These traditional fundamentals are battling an escalation in European prices and new Middle East attacks from Iran on vessels in the Strait of Hormuz, the Persian Gulf, and Israel.

Strait of Hormuz Still Blocked

Conditions could continue to get complicated in the Middle East. It looks as if they are escalating even though President Trump suggested on Monday that the end of the war is near. Furthermore, we’ve seen little progress in the attempts to open the Strait of Hormuz by the U.S. Navy. That promise was made late last week, but it looks like it can’t be delivered if Iran has laid mines in the water.

EIA Storage Report

Looking ahead to Thursday’s U.S. Energy Information Administration’s (EIA) weekly storage report, traders are pricing in a decline of about 41 Bcf. That will be smaller than the 5-year average of -64 Bcf.

The Technical Picture

Technically, the trend is up according to the daily swing chart. A trade through $3.494 will signal a resumption of the uptrend. To put it in terms of oil prices, nearby crude hit its weekly high at $119.48 when natural gas traded $3.494. The trend will change to down when $2.961 is violated but there is still additional support at $2.891, $2.775 and $2.604.

Moving Averages to Watch

Traders are also eyeing the 50-day and 200-day moving averages for direction. The market is currently trading on the bullish side of the 50-day MA at $3.106, but on the bearish side of the 200-day MA at $3.501.

As long as April Natural Gas holds above the 50-day MA at $3.106, the near-term tone will be bullish. Overtaking the 200-day MA at $3.501 could trigger an acceleration to the upside. However, it’s going to take a move in crude oil over $120.00 to trigger a meaningful surge in natural gas prices.

More Information in our Economic Calendar.