Natural Gas Price Fundamental Daily Forecast – Sellers Still in Control as Last Week’s Low Fails

Natural gas futures are trading lower early Monday. The market gapped lower on the daily chart then shortly thereafter, traded through last week’s low at $1.804. The move negated potentially bullish closing price reversal bottoms on both the daily and weekly charts.

Given that supply/demand balances are tight, the selling pressure is likely being fueled by a bearish weather forecast that came out over the weekend.

At 06:37 GMT, March natural gas futures are trading $1.801, down $0.057 or -3.07%. The intraday low is $1.788.

Time Running Out for Bulls

The chief executive of Austrian energy firm OMV said last week that he needs a bout of extreme cold weather to boost profits at a time of historically low natural gas prices, CNBC reported.

“Honestly speaking, if I have one wish for free, please send me an ice blizzard for the gas prices,” Rainer Seele, CEO of OMV, told CNBC’s Squawk Box Europe” last Thursday.

His comments came shortly after the oil and gas group conceded lower commodity prices had squeezed profits in the final three months of 2019, reflecting an industry-wide trend. Natural gas is almost 30% below where it traded a year earlier – and down nearly 15% since the start of 2020.

Coronavirus Impact

CNBC also reported that disruption and curtailment fears in China as a result of the fast-spreading coronavirus has also compounded the pressure on LNG prices, S&P Global Platts said, with China’s biggest importer of LNG declaring force majeure on some contracts on Thursday.

China’s National Offshore Oil Corp. (CNOOC) announced it had suspended contracts with at least three suppliers on Thursday, Reuters reported, citing two unnamed sources.

Short-Term Weather Outlook

According to NatGasWeather for February 10 to February 16, “An active pattern Monday through Wednesday as numerous weather systems sweep across the country, with the most notable one across the East with rain and snow., but with only modest cooling where highs will still reach the 30s to 60s.

The only truly cold air early in the week will be across the Upper Midwest with highs of 20s. However, a frigid cold shot will arrive into the Midwest and East Thursday through Saturday with lows of -10s to 30s, including 30s into the South and Southeast for a surge in national demand. The West will see a mix of mild and cool areas as weather systems bring showers. Overall, light versus normal national demand Monday through Wednesday, then high to very high Thursday through Saturday.”

U.S. Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas fell by 137 billion cubic feet (Bcf) for the week-ended January 31. According to Natural Gas Intelligence, estimates were pointing to a withdrawal in the upper 120s Bcf to lower 130s for this week’s EIA report.

In 2019, the EIA recorded a 228 Bcf withdrawal for the similar period, while the five-year average withdrawal is 143 Bcf.

Total stocks now stand at 2.609 trillion cubic feet, up 615 Bcf from a year ago, and 199 Bcf above the five-year average, the government said.

Daily Forecast

The new forecasts are bearish so the market is going to have a hard time rallying over the near-term unless there is a short-squeeze due to excessive short positions.