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Natural Gas Price Fundamental Daily Forecast – Strengthens Over $3.089, Weakens Under $3.014

By:
James Hyerczyk
Published: Jan 25, 2019, 10:50 UTC

If the price action is limited today then this will indicate traders may be willing to wait a few days for the updated forecast. The key concern for bullish traders is the forecast for after February 4 since recent forecasts are calling for a possible break in cold temperatures.

Natural Gas

Natural gas futures are trading higher on Friday, but backing off from earlier highs as traders continue to react to Thursday’s government report showing a slightly-larger-than-expected storage build, while focusing on the forecasts calling for another wave of polar vortex cold. Additionally, traders continue to toy with a key technical area that appears to be exerting a strong influence on the direction of the market.

At 1008 GMT, March natural gas futures are trading $3.013, up $0.015 or +0.56%.

U.S. Energy Information Administration Storage Report

On Thursday, the EIA reported a 163 Bcf withdrawal for the week-ending January 18. This number was mixed. While falling on the bullish side of the weekly estimates, it failed to impress when compared to the five-year average which came in at 183 Bcf. It was also well-below last year’s 273 Bcf withdrawal for the same period a year ago.

Short-Term Weather Forecast

According to NatGasWeather for the period January 25 to 31, “A strong cold blast will sweep across the Midwest and East into the weekend with lows dropping into the -10s to 20s for very strong demand. A brief break will follow to start next week ahead of the strongest polar blast in the series Tuesday through Friday where lows will drop into the -30s to 20s for very strong demand. The West will see a mix of mild, cool, and cold. Overall, national demand will be high to very high.”

Mid-Term Weather Forecast

According to Bespoke Weather Services, “February gas prices are not particularly impressed with this number (EIA report), but with cold weather only confined to the East on the week and a large draw both in the Midwest and in the South Central we see this print as indicating significant upside risk on any return of colder weather into the middle of February.”

Forecast

The early price action suggests investors are trying to build another higher bottom at $2.897. The other bottoms are $2.809 and $2.771.

The short-term range is $2.809 to $3.406. The key area controlling the direction of the market is $3.089 to $3.014. The bias should shift to the upside if buyers can overcome and sustain a rally over $3.089. The bias will remain to the downside on a sustained move under $3.014.

Holding between $3.014 and $3.089 will indicate investor indecision and impending volatility.

If the price action is limited today then this will indicate traders may be willing to wait a few days for the updated forecast. The key concern for bullish traders is the forecast for after February 4 since recent forecasts are calling for a possible break in cold temperatures.

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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