Natural Gas Price Fundamental Daily Forecast – Strengthens Over $2.985, Weakens Under $2.967

Natural gas futures posted a volatile, two-sided trade on Thursday as investors reacted to weather reports and fresh data from the government on supply, before settling only slightly better.

On Thursday, the U.S. Energy Information Administration reported that domestic supplies of natural gas rose by 91 billion cubic feet (Bcf) for the week-ended June 15. Traders had priced in an increase of 85 Bcf, while the average over the last five years for the same week was a rise of 83 Bcf.

That compared with a build of 96 Bcf in the preceding week, an increase of 61 Bcf a year earlier and a five-year average rise of 95 Bcf.

According to the EIA, total stocks now stand at 2.004 trillion cubic feet (Tcf), down 757 Bcf from a year ago, and 499 Bcf below the five-year average.

According to NatGasWeather.com for June 22 to June 27, “The northern US will also be mostly comfortable through the weekend with highs of 70s to lower 80s for light demand. The southern and western US will be hot with mid-80s to 100s, hottest over California, Southwest, and Southeast. Much of the US will warm into the mid-80s to 100s next week as high pressure strengthens with the exception being the north-central US due to a weather system. Overall demand will be moderate, increasing to high.

Forecast

Gains may be capped over the short-term because of forecasts for average temperatures until July 1. The market will be supported, however, by the supply deficit. This means were likely to see a volatile, sideways trade over the near-term.

Given the supply deficit, any signs of above average heat, or lingering high pressure domes should send prices soaring. Currently, the supply deficit is 27.4% lower than levels at this time a year ago, and about 19.9% below the five-year average for this time of year.

According to the daily chart, the main range is $2.727 to $3.043. Its retracement zone at $2.885 to $2.848 is support. There are also two main bottoms at $2.891 and $2.833.

The short-term range is $3.043 to $2.891. Its 50% to 61.8% retracement zone at $2.967 to $2.985 is currently being tested. This zone is controlling the direction of the market.

Sellers are trying to stop the rally at $2.967 to $2.985 in an effort to form a potentially bearish secondary lower top.

Buyers are trying to cross to the bullish side of $2.985 in an effort to create the upside momentum needed to challenge this week’s high at $3.043.

Overtaking and sustaining a move over $3.043 could trigger a huge breakout on the daily, weekly and monthly charts.