Natural Gas Price Fundamental Daily Forecast – Near-Term Cold May Hold Prices in Range

Natural gas futures are trading steady-to-better ahead of the regular session opening and the release of the latest weekly storage report from the U.S. Energy Information Administration (EIA). Prices fell on Tuesday, following a price spike to the upside during the previous session. As Bespoke Weather Services put it, “Loosening demand finally became apparent in natural gas prices today.”

At 10:55 GMT, May natural gas futures are trading $2.829, up $0.004 or +0.11%.

Professionals didn’t really believe that Tuesday’s rally to a new high for the month was legitimate so they weren’t afraid to short the move, leading to lower prices on Wednesday. In fact, traders said that all it took were reports of rising production volumes and weaker demand to set the speculative buyers straight.

Short-Term Weather Outlook

According to NatGasWeather for March 21 to March 27, “A weather system will track across the Northeast today and Friday with rain, snow, and chilly lows of 20s and 30s. The southern US will be mild to warm with highs of 60s to 80s, while mild across the western and central US with highs of 40s and 60s. After a brief break across the Midwest and Northeast late this weekend, another cold front is expected Tuesday-Wednesday with a swing back to strong demand as lows drop into the teens to 30s. Overall, national demand will swing between moderate and high into next week.”

U.S. Energy Information Administration (EIA) Forecasts

This week’s storage report is expected to show a lighter-than-average withdrawal. Last year, the EIA recorded an 87 Bcf withdrawal from U.S. gas stocks for the period, and the five-year average is a withdrawal of 56 Bcf.

Reuters is looking for a 48 Bcf withdrawal for the week-ended March 15. It estimates a withdrawal range of 30 Bcf to 56 Bcf. Bloomberg showed a median estimate for a 50 Bcf pull, with responses ranging from minus 42 Bcf to minus 56 Bcf. Natural Gas Intelligence’s storage model predicts a 44 Bcf withdrawal.

Daily Forecast

The daily chart pattern indicates that the direction of the market on Thursday is likely to be determined by trader reaction to the near-term pivot at $2.831. Additionally, a trade through $2.897 will signal a resumption of the uptrend, while a move through $2.783 will change the main trend to down.

Over the next 11 to 15 days, we could see “lingering cold risks in April,” Bespoke said. “This is not the high-end cold that we saw last year, but could provide enough demand to keep a temporary floor for prices a bit higher despite what are clear loosening balances,” Bespoke said. “The result is that in the short-term we do not see much more downside for the April contract heading into expiry, especially as the storage deficit indicates risk for a strong expiry, and short-term weather next week will be supportive.”