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Natural Gas Price Fundamental Daily Forecast – Staggering Demand Loss Expectations Weighing on Prices

By:
James Hyerczyk
Published: Mar 20, 2020, 18:27 UTC

With shoulder season beginning with the arrival of spring in the US, demand is expected to remain low. Compounding the normal seasonal pressure on prices will be the unexpected drop in demand caused by the coronavirus outbreak.

Natural Gas

Natural gas futures are trading lower late in the session on Friday, basically mirroring the price action in the U.S. stock market. Prices were primarily supported early in the day by yesterday’s friendlier-than-expected government storage report. However, mild weather expectations and the duration of the coronavirus impact on demand, kept a lid on gains.

At 17:34 GMT, May natural gas futures are trading $1.689, down $0.037 or -2.14%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas fell by 9 billion cubic feet for the week ended March 13.

Traders were looking for a much lighter-than-average withdrawal. Natural Gas Intelligence (NGI) reported that a Bloomberg survey showed a median estimate for a 3 Bcf withdrawal, while a Reuters poll landed on a consensus pull of 6 Bcf. Estimates ranged from minus 2 Bcf to minus 11 Bcf. NGI’s model predicted a 1 Bcf withdrawal.

Total stocks now stand at 2.034 trillion cubic feet, up 878 billion cubic feet from a year ago, and 281 billion cubic feet above the five year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for March 20-26, “A strong cold shot will advance into the central US today with highs of 10s to 30s. Ahead of the system across the South & East, temperatures will be very warm today with highs of 70s & 80s, 50s and 60s for the Northeast. Demand will surge this weekend as cold air over the central US spreads across the Great Lakes, Ohio Valley, and Northeast. Warmer than normal conditions will then return across much of the US next week besides the cooler and unsettled West Coast and far North. With highs of 70s and 80s across the South & East next week, and 50s to 60s returning from Chicago to NYC, national demand will again become light.”

Short-Term Outlook

With shoulder season beginning with the arrival of spring in the US, demand is expected to remain low. Compounding the normal seasonal pressure on prices will be the unexpected drop in demand caused by the coronavirus outbreak.

It’s going to be difficult to find a long-term bullish trader at this time as long as there is ample supply, ideal weather and schools and businesses are shutdown.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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