Natural Gas Price Fundamental Daily Forecast – Looking for Jump in Volatility This Week

Natural gas prices posted a two-sided trade on Monday as investors continued to assess the impact of a delayed injection season and strong production. The price action suggests that investors seem to think cash prices may remain fairly firm through the shoulder season following a couple of rare tighter than expected U.S. Energy Information Administration storage reports the first two weeks of April.

June Natural Gas futures settled at $2.775, up $0.008 or +0.29%.

Forecast

We’re looking for volatility to return this week in an even bigger way than last week with the expiration of the May futures contract on April 26. With so much emphasis on the cash market because of the current unusual weather pattern, we expecting the May contract to come off the board with a bang rather than a whimper.

At 0824 GMT, June Natural Gas futures are trading $2.770, down $0.005 or -0.18%.

The technical pattern looks a little bullish with a new secondary higher bottom formed at $2.691. This joins already established bottoms at $2.660 and $2.638.

Despite the weeklong volatility, the main trend is up according to the daily swing chart. It turned up last week when buyers took out $2.810. Although the rally died at $2.818, the market is currently within striking distance of this top. Taking it out could trigger a boatload of buy stops. Additionally, the daily chart indicates there is room to run to $2.873.

Of course, the entire bullish picture will be wiped clean off the slate if the bottoms at $2.691 and $2.660 fail to hold.

Once again the market has returned to a key 50% level or pivot at $2.766.

A sustained move over this level will signal the presence of buyer. This could drive the market into $2.792, followed by $2.807 then $2.818. The latter is the trigger point for an acceleration to the upside.

A sustained move under $2.766 will indicate the presence of sellers with the next targets $2.739 and $2.720.