Natural Gas Price Fundamental Daily Forecast – May Expiration Could Create Chaotic Trade

Natural gas prices are trading higher for a second session on Tuesday. Volatility is expected to be the theme today as traders prepare for the expiration of the nearby May futures contract.

At 12:00 GMT, June natural gas is trading $1.949, up $0.033 or +1.72%.

Short-Term Weather Outlook

According to NatGasWeather for April 28 – May 4, “As one system exits the Great Lakes and East, a new system will push into the Midwest with another round of showers and slightly cool highs of 50s and 60s. The South and Southeast will be near ideal with highs of 70s to mid-80s, while the Southwest into West Texas will be hot with 90s and 100s, hottest in the deserts. The rest of the U.S. will be comfortable with highs of 60s to 80s. This weekend will be comfortable over most of the U.S. besides the hotter Southwest into Southern Plains. Overall, a mix of light heating and cooling needs into next week.

US Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas rose by 43 Bcf for the week-ended April 17. That would compare with last year’s 92 Bcf injection and the five-year 49 Bcf build, according to the EIA.

Total stocks now stand at 2.140 trillion cubic feet (TCF), up 827 Bcf from a year ago, and 364 Bcf above the five-year average, the government report showed.

EBW Analytics Group analysts said, “The steep decline in weather-driven demand for gas expected over the next two weeks,” should result in the first reported triple-digit storage injection from the Energy Information Administration (EIA) this week.

Daily Forecast

We’re looking for a volatile trading session on Tuesday, but not a repeat of what took place in the crude oil market last week.

Traders are saying the U.S. weather forecasts are mostly supportive, with colder-than-normal temperatures to continue for the northeast U.S. and hotter-than-normal conditions for the South over the six-to- 14-day period.

However, gains could be capped by lower commercial and industrial demand due to continued coronavirus lockdowns across the U.S.