Natural Gas Price Fundamental Daily Forecast – Colder Air Expected March 6 – 12

Natural gas futures continued to climb on Monday, supported by forecasts of cold spell that could drive up demand for the heating fuel. The rally was likely supported by a combination of speculative buying, short-covering and profit-taking after a prolonged down move put the market into technically bearish territory.

April Natural Gas futures settled at $2.686, up $0.029 or +1.09%.

Updated weather forecasting models are showing a return to colder weather over the eastern U.S. during the first week of March.

Forecast

According to NatGasWeather.com, “Temperatures averaged over the next 7 days will be warmer than normal over the eastern half of the country, while cold over the West into the Plains. This will lead to lighter than normal national demand and higher than normal draws on supplies due to the South and East seeing highs of 50s to lower 80s. However, colder air is expected into the eastern half of the country March 6-12 for stronger than normal demand.”

Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly storage report, traders are looking for a draw of about 73 billion cubic feet (bcf) during the week-ended February 23.

That compares with a decline of 124 bcf in the preceding week, a build of 7 bcf a year earlier and a five-year average drop of 118 bcf.

Total natural gas in storage currently stands at 1.760 trillion cubic feet (tcf), according to the EIA.

That figure is 609 bcf, or around 25.7%, lower than levels at this time a year ago, and 412 bcf, or roughly 19.0%, below the five-year average for this time of year.

The main trend is down according to the daily charts, but since February 12, momentum has been trending higher.

The short-term range is $2.565 to $2.723. Its 50% level or pivot is $2.644. We should continue to see an upside bias as long as the natural gas market holds above this level.

Taking out $2.723 will signal a resumption of the short-covering rally. If this move can generate enough upside momentum then we could see a drive into the main retracement zone at $2.774 to $2.823.