Natural Gas Price Fundamental Daily Forecast – Consolidation Suggests Traders Waiting for Next Catalyst

Natural gas futures are edging lower on Monday shortly after the regular session opening. The market continues to consolidate near a two-month high after settling 0.92% higher last week. The price action suggests traders are waiting for a catalyst after last week’s performance was supported by “a favorable storage report, continued robust export activity and the specter of stronger cooling demand on the near-term horizon,” according to Natural Gas Intelligence (NGI).

At 12:07 GMT, June natural gas futures are trading $2.943, down 0.015 or -0.51%.

‘A Favorable Storage Report’

The EIA reported last Thursday an injection of 60 Bcf into storage for the week ended April 30. The number came in below the mid-60s Bcf median expectation found in major polls which traders interpreted as modestly bullish.

Inventories now stand at 1,958 Bcf, though the total was well below the year-earlier level of 2,303 Bcf and under the five-year average of 2,019 Bcf, according to the EIA.

‘Continued Robust Export Activity’

Liquefied natural gas (LNG) levels topped 11.6 Bcf on Friday, according to NGI data. LNG feed gas volumes have hovered near or above the 11 Bcf threshold and within striking distance of record levels for several weeks.

“Pipeline exports to Mexico also are solid, regularly approaching 7 Bcf/d, helping to bolster the demand side of the equation and support prices,” NGI wrote.

‘The Specter of Stronger Cooling Demand on the Near-Term Horizon’

According to NatGasWeather for May 10 – 16, “Weather systems and associated cool shots with showers and thunderstorms will continue across the Plains, Midwest and Northeast this week with highs of 40s to 60s and lows of 30s and 40s. Cooling will also push into Texas, the South/Southeast after Monday with highs of 70s to low 80s for light demand. The Northwest will be nice with highs of 60s and 70s, while very warm to hot California and the Southwest with 80s and 90s. The central and northern U.S. will warm next weekend into the 70s to lower 80s for lighter demand. Overall, moderate demand through Thursday – Friday, then low.”

Daily Forecast

The main trend is up according to the daily swing chart. A trade through $3.001 will signal a resumption of the uptrend. The main trend will change to down on a move through $2.735.

The first support comes in at $2.868. This is followed by $2.837 and $2.802.

At this time, it appears that traders are having a hard time buying strength and playing for a breakout to the upside. If they had a catalyst, perhaps they would be more aggressive.

If they’re not buying strength then they may be looking for a pullback into support which comes in at $2.868 to $2.802.