Natural Gas Price Fundamental Daily Forecast – Bears May Be Fishing for Weak Sell Stops Under $2.771

Natural gas prices are trading lower on Friday, putting the market in a position to challenge the January 3 bottom at $2.771. The market is being pressured by calls for lower demand over the short-term due to a warming trend in several high demand areas. Traders are also reacting to a bearish weekly government storage report.

At 10:14 GMT, March natural gas futures are trading $2.795, down $0.019 or -0.68%.

Short-Term Weather Outlook

According to NatGasWeather for February 1 to February 7, “Dangerous polar air will lose its grip across the northern US today but still quite chilly with highs of 0s to 30s. Strong warming will follow this weekend into next week with highs of 40s and 50s across the Great Lakes to Northeast, with 60s and 70s over the southern US, locally 80s. Colder air will return across the Midwest and Northeast late next week. The West and Plains will see increasing showers and mostly cool to cold. Overall, national demand will be easing to low this weekend through the middle of next week.

U.S. Energy Information Administration Weekly Storage Report

On Thursday, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas dropped by 173 billion cubic feet for the week-ended January 25. Analysts were looking for a decline of 180 billion cubic feet with some guesses as high as 197 billion cubic feet. The five-year average for the same week was a fall of 150 billion cubic feet.

The EIA data also showed that total stocks now stand at 2.197 trillion cubic feet, down 14 billion cubic feet from a year ago, but 328 billion below the five-year average.

Forecast

The current situation is gloomy for bullish traders because traders aren’t certain about the next support target on $2.771. Some traders are saying its $2.500. Today’s price action suggests sellers aren’t being too aggressive in pressuring the market under $2.771. They may be just fishing for stop losses placed by weaker long speculators.

With another cold blast predicted February 8 to 14, it’ll be a high risk move shorting at current levels.