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Natural Gas Price Fundamental Daily Forecast – Demand Could Increase Wednesday to Sunday

By:
James Hyerczyk
Published: Apr 8, 2019, 09:56 UTC

The market is being underpinned by the new forecast calling for stronger national demand from Wednesday to Sunday. Speculators could also be betting on the cold weather expanding beyond Sunday. This would be a short-term development that could drive prices into resistance zones at $2.709 to $2.745 and $2.764 to $2.796.

Natural Gas

Natural gas futures are trading higher on Monday, following through to the upside following Friday’s technical closing price reversal bottom. There were no major changes in the fundamentals over the week-end so we have to attribute the rally to short-covering and position-squaring.

This type of chart pattern is not always indicative of a change in trend. Often, it just indicates the buying is just greater than the selling at current price levels. What this means is that short-sellers are still in control, but they prefer not adding to positions on weakness, but would rather take profits then short again at more favorable price levels.

The first upside targets could be major, long-term retracement level targets at $2.709 and $2.745, or the rally to even extend to 50% to 61.8% of the last break from $2.897 to $2.632. This would make $2.764 to $2.796 another target.

This short-covering rally may not be all about a technical chart pattern either. There could be a change in the weather forecasts in the works, or some other factor driving up demand later in the month.

At 09:35 GMT, May Natural Gas futures are trading $2.677, up $0.013 or +0.49%.

Natural Gas
Daily May Natural Gas

Short-Term Weather Outlook

According to NatGasWeather.com for April 8 to April 14, “Mild to warm conditions will cover most of the US early this week with highs of 50s and 60s across the northern US, locally 70s across the South Great Lakes/Ohio Valley, with 70s and 80s across the southern US. There will still be areas of showers across the Northwest, South, Great Lakes, and Northeast, just without cool air besides the far North US. Cooler conditions will spread across the northern and central US Wed-Sun with lows of 20s and 30s for stronger national demand. Cooling will attempt to reach the East next weekend. Overall, national demand will be low-very low through Tuesday then increasing to moderate-high by next weekend.”

U.S. Energy Information Administration Weekly Storage Report

Last Thursday, the U.S. Energy Information Administration (EIA) reported that U.S. natural gas stockpiles increased by 23 billion cubic feet for the week-ending March 29. The consensus called for a build of 2 BCF although some guesses were as high as 10 Bcf. The five-year average for the week is a withdrawal of 28 billion cubic feet, and last year’s withdrawal totaled 29 billion cubic feet, according to the government data. Additionally, Total U.S. stockpiles now stand at 16.8% below last year’s level and 30.9% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.130 trillion cubic feet (Tcf) at the end of last week, around 505 billion cubic feet below the five-year average of 1.635 Tcf and 228 Bcf below last year’s total for the same period. Working gas in storage totaled 1.358 Tcf for the same period a year ago.

Daily Forecast

The market is being underpinned by the new forecast calling for stronger national demand from Wednesday to Sunday. Speculators could also be betting on the cold weather expanding beyond Sunday. This would be a short-term development that could drive prices into resistance zones at $2.709 to $2.745 and $2.764 to $2.796.

Over the next several days, traders will be watching the forecast for changes in temperatures after April 14. Shorts could continue to cover aggressively if the forecasts begin to call for colder weather after this date.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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