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James Hyerczyk
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Natural Gas

Natural gas futures are up sharply on Friday, reaffirming the uptrend after buyers took out the previous main top at $3.005. Today’s rally is being fueled by the latest weather reports that continued to point toward increased heating demand in widespread region over the next two weeks.

At 14:41 GMT, March natural gas is trading $3.204, up $0.089 or +3.03%.

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EBW Analytics Group Forecast

Natural Gas Intelligence (NGI) wrote, “As of early Friday both the European and American weather models had posted ‘massive gains’ in projected heating demand over the previous 24 hours, enough to put this month into the top 10 Februarys of the last 70 years in terms of gas-weighted heating degree days, according to EBW Analytics Group analysts.”

“By next Friday, Arctic air is expected to blanket much of the U.S. and extend toward the Gulf Coast. Large-scale freeze-offs are increasingly likely,” the EBW analysts said.

This raises the possibility of a 300 Bcf withdrawal for the February 12-18 time frame, a projection that doesn’t even take into account potential freeze-offs, according to the firm.

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Bespoke Weather Services Forecast

Bespoke Weather Services said the weather models continued to trend “astonishingly colder” overnight, pushing the firm’s 15-day forecast more than 100 gas-weighted degree days colder than normal.

“The issue continues to be the development of a very cold Arctic air mass up in Canada, which is forced fully into the U.S. underneath the strong” North Atlantic Oscillation block “on the Atlantic side,” Bespoke said. “This block has been forecast to wane after mid-month, but timing of this has slowed, keeping colder momentum going for longer.

“Our sense remains that we move back to a variable pattern late month, but, for now, the theme is longer-lasting cold versus the previous forecast.”

US Energy Information Administration Weekly Storage Report

S&P Global Platts said, “A string of massive weekly U.S. natural gas storage withdrawals, starting with the 192 Bcf pull reported February 4, have the potential to unravel recent forecasts, and prompt stocks to enter next year’s heating season more than 600 Bcf below the five-year average, marking a dramatic year over year reversal.

Natural gas storage inventories fell 192 Bcf to 2.689 Tcf for the week ended January 29, according to the U.S. Energy Information Administration.

According to Natural Gas Intelligence (NGI), the EIA report was expected to show a withdrawal close to 200 Bcf.

The EIA recorded a draw of 155 Bcf during the similar week a year ago, and the five-year average withdrawal stands at 146 Bcf for the period.

Daily March Natural Gas

Daily Forecast

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous main top at $3.005. The next upside target is the November 13 main top at $3.062. Taking out this level could trigger an acceleration to the upside with the October 30 main top at $3.320 the next likely upside target.

The three-month range is $3.320 to $2.268. The market is currently trading on the strong side of its 50% to 61.8% retracement zone at $2.794 to $2.918. This zone is controlling the near-term direction of the market. It is now support.

Look for an upside bias to develop on a sustained move over $2.918, and for a downside bias to develop on a sustained move under $2.794. A trade through $2.734 will change the main trend to down.

For a look at all of today’s economic events, check out our economic calendar.

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