Natural Gas Price Fundamental Daily Forecast -10-15 Day Forecast Calls for Steadily Freezing Conditions

Natural gas futures are trading lower shortly before the regular session opening at 13:00 GMT and the release of the government’s weekly storage report at 15:30 GMT. In the meantime, bullish traders are hoping for the late season winter weather to intensify and for demand for U.S. liquefied natural gas (LNG) to continue to rise.

At 11:28 GMT, March natural gas futures are trading $2.642, down $0.060 or -2.22%.

Mid-Range Weather Outlook

The latest report from Bespoke Weather Services predicts steadily freezing conditions in the weeks ahead.

“Once again, the changes in the weather forecast are to the colder side, enough to now move the 15-day forecast as a whole a little colder even versus the long-term, 30-year normal,” Bespoke Weather Services said Wednesday.

“Much of the colder change the last several days has been centered around more storm-induced variability than projected a week ago, as opposed to a true cold outbreak coming out of Canada,” Bespoke added. “But that narrative changes in the 11- to 15-day period, as a stronger cold air mass is expected to push southward out of Canada into the U.S. Its focus appears to be in the middle of the nation…as opposed to hitting the more populated East and South, though it still looks like enough for a few days of above-normal” demand.

US LNG Exports Remains Strong

Natural Gas Intelligence (NGI) is reporting that strong demand for U.S. LNG exports has helped cut into domestic stocks. While days of heavy fog along the Gulf Coast last week prevented some vessels from entering and leaving LNG facilities, cutting into volumes, export volumes have rebounded this week. They were above 11 Bcf on Wednesday and near record levels.

“The bounce back in LNG export levels after the fog…along with increased demand driven by this cold weather have helped to lift the prompt month,” Wood Mackenzie analyst Anthony Ferrara said.

US Energy Information Administration Weekly Storage Report

NGI is reporting that Bespoke anticipates EIA to report to a draw of 140 Bcf for the week-ended January 22.

“Analysts are broadly expecting a triple-digit pull, though not as big of a decrease as reported a week earlier. EIA recorded a pull of 187 Bcf from storage for the week ended January 15, the largest decrease of the season,” NGI wrote.

“For the latest week, a Reuters poll found estimates ranging from withdrawals of 127 Bcf to 145 Bcf, with a median decrease of 138 Bcf. Bloomberg’s survey of analysts landed at a median decrease of 139 Bcf, with estimates ranging from pulls of 131 Bcf to 143 Bcf,” NGI said.

Daily Forecast

The combination of the weather and the NGI data plus the rollover into the March futures contract could produce volatile conditions on Thursday, but we thing the direction of the market will be determined by trader reaction to the 50% to 61.8% retracement zone at $2.630 to $2.678.

We’re looking at a strong upside bias to develop on a sustained move over $2.678 with $2.794 the minimum upside target.

A sustained move under $2.630 will signal the presence of sellers. If this creates enough downside momentum then look for a minimum break into $2.552.

For longer-term buyers, $2.918 appears to be the trigger point for an acceleration to the upside.