Natural Gas Price Fundamental Daily Forecast – Milder Temperatures after March 1 Capping Prices

Balances have tightened considerably in the past few months which may be enough to provide a floor for the market, but there just aren’t enough lingering cold spells to generate any sustainable rallies.
James Hyerczyk

Natural gas futures are trading lower on Monday shortly after the regular session opening after an uneventful weekend in the weather department. The latest forecasts are a little bearish, calling for late February cold to moderate into March.

Balances have tightened considerably in the past few months which may be enough to provide a floor for the market, but there just aren’t enough lingering cold spells to generate any sustainable rallies.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas fell by 151 billion cubic feet for the week-ended February 14.

Last year’s withdrawal was 163 Bcf and the five-year average draw is 136 Bcf, according to the EIA.

Total stocks now stand at 2.343 trillion cubic feet, up 613 billion cubic feet from a year ago, and 200 billion cubic feet above the five-year average, the government said.

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Short-Term Weather Outlook

According to NatGasWeather for February 24 to March 1, several weather systems will impact the US the next few days, although quite mild over most regions with highs of 40s to 70s for light demand. Colder exceptions will be across the Northern Plains with highs of 20s to 30s.

One weather system will bring showers across the Southern Plains, while a second impacts the Northwest. Much colder conditions will sweep across the west-central US Wednesday through Thursday then over the eastern half of the US Friday through Sunday for a surge in national demand as lows of -0s to 20s become widespread, including 30s into the South and Southeast. Overall, light demand to start the week, then high for the second half of the week and next weekend.

Daily Forecast

The key level to watch today is $1.878. Look for the bearish tone to continue on a sustained move under this level with $1.831 the first likely downside target. Overcoming, $1.878 could trigger a short-covering rally, but the move will likely be stopped by resistance levels at $1.906 and $1.928.

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