Natural Gas Price Fundamental Daily Forecast – Bulls Feeling Extreme Cold, Bears See Warmer Month-End Temps

Natural gas futures are inching lower early Friday after posting a dramatic reversal to the downside following the release of a government storage report that failed to impress bullish traders despite a nearly 200 Bcf drawdown. The combination of extremely cold weather and robust export demand wiped out long-held storage surpluses.

At 09:09 GMT, March natural gas futures are trading $2.854, down $0.014 or -0.49%.

The drop in futures prices on Thursday did not faze cash market buyers who sent prices throughout the country soaring. According to Natural Gas Intelligence, “Stout gains were seen throughout the Northeast, as usual, but pricing hubs in the normally quiet Midcontinent market also got in on the action. OGT jumped more than $4.00 from Tuesday to Wednesday to average $8.600; it hit $100.00 on Thursday.”

“Why such games early this week that dropped prices sharply lower despite the coldest pattern in recent years coming, only to reverse to near $3%”, NatGasWeather said.

The forecaster said frigid air was to remain anchored across the northern and central United States into next week, with daytime highs struggling to climb from sub-zero overnight lows. The Arctic air mass had started to push further south into Texas by Thursday morning and was set to move eastward this weekend.

US Energy Information Administration Weekly Storage Report

The EIA on Thursday said that inventories for the week-ending February 5 tumbled 171 Bcf to 2,518 Bcf, which flipped the 41 Bcf year/year surplus a week ago to a 9 Bcf deficit.

According to NGI, “A Bloomberg survey of 11 analysts produced estimates from 182 Bcf to 170 Bcf, with a median withdrawal of 180 Bcf. Reuters polled 20 analysts, whose estimates ranged from withdrawals of 188 Bcf to 150 Bcf, with a median decrease of 181 Bcf. NGI pegged the draw at 180 Bcf.

Daily Forecast

We could continue to see a choppy, two-sided trade over the near-term. Model fluctuations haven’t given the market much confidence in how the weather pattern at the end of the month may take shape. Whether the bond-chilling conditions persist is not out of the question, but Bespoke Weather Services said it favors a trend toward a more variable, closer-to-normal pattern moving into the final week of the month.

The March natural gas futures contract is currently trading inside of a key retracement zone at $2.918 to $2.794.

A sustained move over $2.918 will indicate the presence of buyers. The first upside target is $3.057. Taking out this level will signal a resumption of the uptrend with $3.062 the next likely objective. However, this is a potential trigger point for an acceleration into $3.320.

A failure to hold $2.794 will signal the presence of sellers. Taking out $2.734 will change the main trend to down with $2.663 to $2.570 the next likely target zone.

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