Natural Gas Price Fundamental Daily Forecast – Bullish Over $2.817, Bearish Under $2.775

Natural Gas futures inched slightly higher on Tuesday in reaction to a small uptick in demand and the lingering cold weather in key demand areas.

May Natural Gas futures settled at $2.809, up $0.009 or +0.32%.

The colder-than-average temperatures in much of the country over the past week are helping to give prices a boost. Additionally, a new forecast calling for these cold temperatures to stick around the next few days is also encouraging buyers.

Most buyers appear to be following the National Weather Service’s 8-14 day outlook, calling for a likelihood of colder-than-average temperatures in the Northwest, Southwest, Rockies, Northeast and parts of the Midwest.

Forecast

Natgasweather.com says, “Reinforcing cold air will follow late in the week across the Northeast to keep stronger than normal national demand going.” They are also saying that overall demand will be high.

Looking ahead to Thursday’s government report, the early call is for a draw of 100 Bcf. Last week, the Energy Information Administration reported a -57 Bcf change for the week-ending March 2.

Despite the friendly outlook, natural gas futures are trading lower early Wednesday. At 0730 GMT, May Natural Gas futures are trading $2.791, down $0.018 or -0.64%.

The main range is $2.951 to $2.600. Its 50% to 61.8% retracement zone is $2.775 to $2.817. This zone is providing resistance. It is also controlling the longer-term direction of the market.

The short-term range is $2.600 to $2.831. Its retracement zone at $2.716 to $2.688 is support.

Although the main trend turned up on the daily chart on Tuesday, there was very little follow-through to the upside which suggests the move was fueled by short-covering rather than new buyers.

This market is not likely to rally very far unless new buyers step in to drive prices higher. In the meantime, we can expect hedgers to continue to come in at $2.775 to $2.817.

Essentially, we’re looking for a bullish tone on a sustained move over $2.817 and for a bearish tone to redevelop on a sustained move under $2.775.