Natural Gas Price Fundamental Daily Forecast – Lingering Cold Extending Demand Season

Natural gas futures finished lower, but off its lows on Thursday as some investors continued to hold out hope of at least one more storage withdrawal before the injection season actually begins after its delayed start.

On Thursday, May Natural Gas futures settled at $2.675, down 0.043 or -1.58%.

Prices fell sharply shortly after the release of the U.S. Energy Information Administration’s (EIA) weekly storage report, but the selling wasn’t strong enough to take out the week’s low hit on April 2 at $2.650.

According to the EIA, U.S. natural gas stocks decreased by 29 billion cubic feet for the week-ending March 30. Analysts were expecting a storage withdrawal of around 29 billion cubic feet. The five-year average for the week is a withdrawal of 28 billion cubic feet, and last year’s storage increase for the week totaled 2 billion cubic feet. Natural gas inventories fell by 63 billion cubic feet in the week-ending March 23.

Total U.S. stockpiles fell week over week to 34% below last year’s level and are now 20.4% below the five-year average.

On Thursday, the EIA reported that U.S. working stocks of natural gas totaled about 1.354 trillion cubic feet at the end of last week, around 347 billion cubic feet below the five-year average of 1.701 trillion cubic feet and 697 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.051 trillion cubic feet for the same period a year ago.

Forecast

Natural gas is trading higher early Friday as investors price in the possibility of high demand due to a lingering cold system over the northern and eastern states next week. Cooler temperatures are expected across much of the country with only the South seeing mild and warmer weather.

At 0931 GMT, May Natural Gas futures are trading $2.695, up $0.020 or +0.75%.

Technically, the main trend is down, but there is evidence that aggressive counter-trend speculators may be trying to form a secondary higher bottom.

The short-term range is $2.610 to $2.764. Its 50% level or pivot at $2.687 is controlling the price action.

The intermediate range is $2.831 to $2.610. Its retracement zone at $2.720 is the first objective.

The main range is $2.951 to $2.600. Its retracement zone at $2.775 to $2.951 is the second objective.

We’re likely to see a short-term upside bias today if buyers can sustain a move over $2.687. If this creates enough upside momentum then look for a rally into $2.720 to $2.747.

A sustained move under $2.687 is likely to fuel a downside bias today with $2.610 to $2.600 the primary downside targets.

We may see one more “pop” to the upside due to the extended demand period, but this is likely to be met by strong sellers.