Natural Gas Price Fundamental Daily Forecast – Strengthens Over $2.551, Weakens Under $2.534

Natural gas futures are trading slightly higher on Tuesday with the market currently testing the key technical zone that could determine its next near-term move. Continuing to straddle this zone over the near-term will indicate investor indecision. As one professional put it, “It is unlikely this market will see a dramatic move in either direction until the summer demand is better defined.” The current price action seems to be reflecting that thought.

At 12:16 GMT, June Natural Gas is trading $2.549, up $0.025 or +0.99%.

Natural Gas Intelligence is also saying, “Lacking inspiration from a forecast showing weak weather-driven demand well into the month of May, natural gas futures sold off for the third straight session Monday.”

Bespoke Weather Services said, “The weekend weather data slightly lowered demand expectations for the 15-day outlook period compared to Friday’s forecasts.” The weather forecaster also said, “the pattern toward the middle of the month has shifted cooler, reducing cooling demand but without adding significant heating demand, as it’s ‘getting too late in the season for colder anomalies to contribute much’ in terms of overall demand.”

It looks as if we should start looking forward to a rangebound market.

Short-Term Weather Outlook

According to NatGasWeather for May 7 to May 13, “Weather systems with heavy showers will continue across the central and far northern US this week with slightly chilly lows of 30s to 40s. The Mid-Atlantic and East will be mostly comfortable with highs of 60s and 70s. The southern US will see areas of heavy showers and thunderstorms but will remain warm with highs of 70s to lower 90s. Overall, light national demand will increase Wednesday to Sunday due to stronger cooling across the northern and central US, then easing back to light next week as the southern U.S. also cools.”

U.S. Energy Information Administration Weekly Storage Report

The EIA reported on May 2 that domestic supplies of natural gas rose by 123 billion cubic feet for the week ended April 26. That build compares to just a 50 Bcf build recorded in the year-ago period and a five-year average 70 Bcf injection.

Total stocks now stand at 1.462 trillion cubic feet, up 128 billion cubic feet from a year ago, but 316 billion below the five-year average, the government said.

Daily Forecast

The main trend is down. A trade through $2.626 will change the main trend to up. A move through $2.477 will signal a resumption of the downtrend.

The 50% to 61.8% retracement zone of this range is $2.551 to $2.534. Trader reaction to this zone will determine the near-term direction of the market. Currently, June natural gas is trading inside this range.

Look for an upside bias to develop on a sustained move over $2.551, and for the downside bias to continue on a sustained move under $2.534.