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Natural Gas Price Fundamental Daily Forecast – Choppy Trade Before Conditions Turn Bearish

The whip-saw action in the market was fueled by minor changes in the weather forecasts. The price action also suggests investors are confused about how to play the current weather conditions. The extremely short-term weather conditions are mixed, but the near- to mid-term patterns are bearish, which likely means improving storage deficits before the summer heat arrives.
James Hyerczyk
Natural Gas

Natural gas futures are trading slightly higher on Wednesday as traders try to recover some of the loss from the previous session. On Tuesday, the market surged to a two-week high early in the session, falling short of a 50% resistance level at $2.623. However, sellers came in to stop the move, turning the market lower for the day.

At 10:17 GMT, June natural gas futures are trading $2.576, up $0.001 or +0.04%.

The whip-saw action in the market was fueled by minor changes in the weather forecasts. The price action also suggests investors are confused about how to play the current weather conditions. The extremely short-term weather conditions are mixed, but the near- to mid-term patterns are bearish, which likely means improving storage deficits before the summer heat arrives.

Short-Term Weather Outlook

According to NatGasWeather for May 1 to May 7, “Weather systems with rain and snow will impact the central and far northern US the next several days with chilly lows of 20s to 40s. The southern Great Lakes, Mid-Atlantic, and portions of the Northeast will warm into the 60s and 70s the next few days. The southern US will be very warm with highs of 70s to lower 90s. Weather systems will track across the northern US this weekend and next week with showers and local cooling, otherwise most of the rest of the country will be warm highs of 60s to 80s, although still locally hot 90s in the southern U.S. Overall, national demand will be low.”

Daily Forecast

Technical factors could continue to drive natural gas prices higher for a couple of days with the first target zone coming in at $2.623 to $2.657. The market would have to overcome this zone to sustain a rally into another target at $2.709.

On the downside, the first target area is $2.546 to $2.529.

The analysts at NatGasWeather have a more bearish outlook. They see hefty storage injections for several weeks until more ominous heat builds.

”We don’t see this occurring for at least several more weeks, forcing the markets to patiently wait out very large guilds, and where our data suggests the next four out of five are likely to print over 100 Bcf,” NatGasWeather said. “This should continue to provide opportunity for steady improvement in deficits from currently 369 Bcf toward 250 Bcf, starting with Thursday’s Energy Information Administration (EIA) report where deficits should improve by at least 40 Bcf.”

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