Natural Gas Price Fundamental Daily Forecast – Temps Expected to Return to Seasonal Levels Next Week

Natural gas futures are trading lower early Tuesday. The price action has the market trading inside yesterday’s range which typically indicates investor indecision and impending volatility.

At 0925 GMT, March Natural Gas futures are trading at $2.915, down 0.026 or -0.88%.

After last week’s volatility, prices appear to be consolidating as traders continue to monitor the winter weather forecasts to gauge current heating needs.

The latest forecast calls for below freezing temperatures to continue across most parts of the Northeast through January 20, with light snow expected throughout the region. That forecast is only four days out so I have to think it’s been priced into the market.

The forecast that investors are watching goes out to January 28. Currently, models are showing northeast temperatures were expected to return to seasonal levels from January 21 to January 28.

Forecast

This week’s storage report is expected to show a draw of about 197 billion cubic feet (bcf) in the week-ended January 12.

That compares with last week’s 359 bcf draw, a fall of 243 bcf a year earlier and a five-year average drop of 203 bcf.

Total natural gas in storage currently stands at 2.767 trillion cubic feet (tcf), according to the U.S. Energy Information Administration. That figure is 415 bcf, or around 13.0%, lower than levels at this time a year ago and 382 bcf, or roughly 12.1%, below the five-year average for this time of year.

The direction of the market today will be determined by trader reaction to the retracement zone at $2.902 to $2.989.

Look for a bullish tone to develop on a sustained move over $2.886 and for the downside pressure to continue on a sustained move under $2.902.