Natural gas futures are inching higher early Thursday as traders prepare for the release of the government’s weekly storage report at 15:30 GMT. The report is expected to reveal a modest withdrawal amid forecasts calling for the mild temperatures to continue, leading to expectations of light demand.
At 12:08 GMT, May natural gas futures are trading $2.744, up $0.016 or +0.59%.
Technical factors are also contributing to the price rise with prices recovering from a successful test of a 50% to 61.8% retracement zone at $2.706 to $2.622. This doesn’t represent a change a trend, but it does alleviate some of the excessive downside pressure.
Short-Term Weather Outlook
According to NatGasWeather for March 11 to March 17, “Most of the U.S. will be mild to warm again today with highs of 50s and 60s besides 70s and 80s across the southern U.S. Cooler exceptions will occur over the showery Southwest and the Northern Plains as a fresh cold shot arrives, then sweeps across the Great Lakes and Northeast this weekend with chilly lows of 10s to 30s.
The Southwest system will track into the Rockies and Plains Friday through Sunday with heavy rain and snow, although gradually warming over time. A milder break with highs of 50s to 70s will set up over the eastern half of the U.S. next week ahead of another cold shot pushing into the Plains/Mideast.”
US Energy Information Administration Weekly Storage Report
Briefly, traders expect to see a modest withdrawal in Thursday’s EIA weekly storage report.
Natural Gas Intelligence’s (NGI) model predicted a 104 Bcf pull for the week ending March 5. Last year, EIA recorded a 72 Bcf withdrawal for the period, and the five-year average is a pull of 89 Bcf.
NGI also said, “A Bloomberg survey showed respondents predicting a median 78 Bcf withdrawal for this week’s EIA report, with estimates ranging from draws of 58 Bcf to 104 Bcf. A Reuters poll showed estimates ranging from withdrawals of 39 Bcf to 104 Bcf, with a median decline in stocks of 76 Bcf.”
Short-Term Forecast
We could see a mild lift in prices as long as $2.706 holds as support. Our primary upside target is $2.784 to $2.815. Since the main trend is down, sellers could come in on a test of this area.
For a look at all of today’s economic events, check out our economic calendar.
