James Hyerczyk
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Natural Gas

Natural gas futures are trading sharply higher shortly after the release of today’s U.S. Energy Information Administration (EIA) weekly storage report, reversing earlier weakness. The price action suggests traders are downplaying updated forecast models calling for less demand for the next two weeks.

At 14:56 GMT, June natural gas futures are trading $2.839, up 0.058 or +2.09%.

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US Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas rose by 38 billion cubic feet (Bcf) for the week-ended April 16. That just about matched an average increase of 37 Bcf forecast by analysts polled by S&P Global Platts.

Ahead of the EIA report, Natural Gas Intelligence (NGI) reported that a Bloomberg survey showed a median prediction of 47 Bcf based on 13 estimates ranging from 39 Bcf to 56 Bcf. Reuters polled 18 analysts, who came up with the same range of estimates but with a median increase of 49 Bcf. NGI’s model projected a 47 Bcf build.

Total stocks now stand at 1.883 trillion cubic feet (Tcf), down 251 Bcf from a year ago but 12 Bcf above the five-year average, the government said.


Major Weather Models Lose Demand Overnight

The major weather models both lost demand overnight, NGI reported. The European model in particular dropped 9 total degree days from the outlook compared to Wednesday afternoon’s projections, according to NatGasWeather.

The European and American datasets both forecast “less cold air over the northern U.S. early next week through the first week of May while also predicting less heat over the southern U.S.,” the firm said. “…For bulls to convincingly claim $2.700 on May 2021, it might take the European model gaining demand back this afternoon, as it’s now forecasting a rather bearish pattern” from next Tuesday through May 7.

Daily June Natural Gas

Daily Forecast

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the previous main top at $2.830. A move through $2.735 will change the main trend to down.

The main range is $3.082 to $2.521. The market is currently testing its 50% to 61.8% retracement zone at $2.802 to $2.868. This zone is controlling the near-term direction of the June natural gas futures contract.

Look for the market to possibly accelerate to the upside on a breakout over $2.868 with $2.958 the next likely upside target.

A break back under $2.802 will indicate the return of sellers.

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

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