Natural Gas Price Fundamental Daily Forecast – Lingering Cold Not Enough to Support Upside Bias

Natural gas futures finished higher on Wednesday with traders playing with a couple of technical retracement levels while positioning themselves ahead of Thursday’s U.S. Energy Information Administration’s weekly storage report.

May Natural Gas futures settled the session at $2.718, up $0.021 or +0.78%.

Traders were also responding to fresh weather reports. The National Weather Service forecasts below-average temperatures for most of the eastern two-thirds of the U.S. and a few parts of the West in the six-to-10 day period, before shifting in scope to encompass the fringes of the Northeast and Mid-Atlantic into much of the Midwest and the Northwest into the edges of the Southwest in the eight-to-14-day period.

The NWS also predicted average to above-average temperatures across the rest of the country.

Forecast

It looks as if the market is being underpinned by expectations of at least 1 to 2 more withdrawals from storage. This is unusual because the seasonal draws usually end on March 31, the traditional end of the withdrawal season.

NatGasWeather.com is saying “Cold conditions will continue over the Great Lakes and East early next week for strong national demand, then finally warming late week.”

Today’s EIA report is expected to show a draw of about 29 Bcf. Last week, the EIA reported a draw of 63 Bcf.

Essentially, the weather is supportive, but the draw is expected to be small. Additionally, the weather is improving and the injection season is just beginning. This all adds up to a bearish scenario.

The main range is $2.831 to $2.610. Its 50% to 61.8% retracement zone at $2.720 to $2.747 is the first resistance. The second is a resistance zone at $2.775 to $2.817.

The short-term range is $2.610 to $2.764. Its 50% level is $2.687. Buyers are trying to establish support at this price. If it fails then look for a possible near-term sell-off into the pair of main bottoms at $2.610 to $2.600.

The market is bearish even with the lingering cold extending the winter withdrawal season. Rallies are likely to be sold even if a bigger than expected draw triggers a short-covering rally.

The market could get crushed if the draw is small than expected.