Natural Gas Price Fundamental Daily Forecast – Moderate Near-Term Demand Expected

Natural gas futures are trading lower on Friday, following through to the downside after yesterday’s weak close. On Thursday, the market failed to respond to a government report showing a bigger draw than forecast.

At 1317 GMT, April Natural Gas futures are trading $2.630, down $0.046 or -1.72%.

According to the U.S. Energy Information Administration, natural gas in storage fell 124 billion cubic feet during the week-ending February 16. Traders were looking for a draw of 110 to 121 Bcf.

Forecast

Demand and the weather are driving the price action at this time.

According to S&P Global Platts Analytics, U.S. demand is estimated to average 85.3 Bcf/d over the next eight-14 days, a 4 Bcf/d increase from the 81.3 Bcf/d averaged over the month of February last year.

According to NatGasWeather.com for February 23 to March 1, “A cool front will start over the east-central U.S. today with mild to cool conditions over the Northeast, and very warm conditions over the Southeast. It remains cold with areas of snow over the western and central U.S., which will continue through next week. This weekend, high pressure will expand over the South and East with mild conditions where highs reach the 50s to 80s, warmest over the SE. Modest cooling will finally reach the East at the end of next week. Demand overall the next week will be moderate.”

The short-term range is $2.565 to $2.701. Its 50% or pivot is $2.633. Trader reaction to this price will set the tone over the near-term. A bullish tone could develop on a sustained move over this level, and a bearish tone under it.

If an upside bias develops then look for buyers to go after $2.701. This could be the trigger point for further short-covering. If a move through this level creates enough upside momentum then look for a possible surge into a major 50% level at $2.774 over the near-term.

A sustained move under $2.633 will signal the return of sellers. They could drive prices into the $2.565 main bottom.

We could see a rangebound trade between $2.565 and $2.701 the next few days while traders try to determine the impact of cold temperatures expected to hit around the first week in March.