Natural Gas Price Fundamental Daily Forecast – Prices Balanced as Traders Wait for Updated 8 to 14 Day Forecast

This week’s weekly government report showed a smaller-than-expected draw last week, but it wasn’t enough to shift momentum to the upside. The market still closed lower for the session and near its low for the day as investors continued to react to the potentially bearish 8 to 14 day weather forecast.

At 0904 GMT, March Natural Gas futures are trading $2.908, up $0.051 or +1.79%. We could be looking at a delayed reaction to the report miss, or light short-covering due to short-term oversold conditions.

On Thursday, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas fell by 99 billion cubic feet for the week ended January 26. This was slightly below the consensus average guess of 100 bcf.

The five-year average withdrawal is 160 billion.

Total stocks now stand at 2.197 trillion cubic feet, down 526 bcf from a year ago, and 425 bcf below the five-year average, the government said.

Forecast

Despite this week’s steep sell-off, the main trend is still up according to the daily swing chart. The main trend will change to down if sellers can take out $2.693.

The main range is $2.532 to $3.259. Its 50% to 61.8% retracement zone is $2.896 to $2.810.

The minor range is $2.693 to $3.259. Its retracement zone comes in at $2.976 to $2.909.

Combining the two zones makes $2.909 to $2.896 the key area to watch today. This area is likely to act like a pivot.

Prices could stabilize inside the retracement zones because traders expect overall demand for natural gas to be high in the coming week. The week-end could see some relief from the current cold temperatures hitting the Midwest and Northeast, but there are still some investors who believe the cold will return early next week.

Of particular interest for traders is the 8 to 14 day forecast since traders tend to look about two weeks out. Earlier in the week, this report called for colder temperatures during this time period, but this report changed earlier in the week, trigger the steep break.

Trading inside the two retracement zones indicates that prices are balanced. This means the direction of the market over the next two weeks will be determined by trader reaction to $2.909 to $2.896 and the weather forecast.