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James Hyerczyk
Natural Gas

Natural gas prices are trading higher ahead of the weekend as traders shrug off Thursday’s government report that came out in line with expectations, uncertain weather forecasts that lean toward the warmer side and weaker spot gas prices. Speculators appear to be betting on a surprise over the weekend.

On the bullish side of the equation, Bespoke Weather Services expects a much larger draw next week, LNG export demand is expected to keep prices well supported through the summer and production may come in lower.

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At 14:24 GMT, January natural gas futures are trading $2.690, up $0.054 or +2.05%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas declined by 122 billion cubic feet (Bcf) for the week-ended December 11. A consensus of analysts expected a 120 billion draw.

Total stocks now stand at 3.726 trillion cubic feet, up 284 billion cubic feet from a year ago, and 243 billion cubic feet above the five-year average, the government said.

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Short-Term Weather Outlook

According to NatGasWeather for December 18-24, “A cool start across much of the US today with lows of 10s to 30s besides the far southern US for strong national demand. However, milder conditions will expand to cover much of the US late this weekend and early next week with highs of 40s to 70s for lighter demand. Cooler exceptions early next week will be across the Northwest and Northeast corners. A strong cold shot is expected into the Rockies, Plains, and Midwest mid-next week with areas of rain and snow and frosty lows of -0s to 30s for a swing back to strong national demand. Overall, national demand will be moderate-high today, then back to low late this weekend through mid-next week.”

Daily Forecast

The early price action suggests a bullish tone on Friday. Since traders are shrugging off the short-term fundamentals and seemingly betting on stronger demand, the charts are likely to determine the direction of the market today.

Holding above $2.685 will indicate the presence of buyers, but a move over $2.760 could trigger an acceleration to the upside.

A sustained move under $2.685 will signal the presence of sellers. This could trigger a break to $2.546 over the short-run.

For a look at all of today’s economic events, check out our economic calendar.

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