Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $2.644 Will Set the Tone Today

Natural gas futures are trading lower early Wednesday after posting a slightly lower close the previous session. Prices spiked to the downside to $2.633 on Tuesday but recovered into the close.

At 0920 GMT, April Natural Gas prices are trading $2.667, down $0.016 or -0.60%.

Although updated weather forecasting models are showing a return to colder weather over the eastern U.S. during the first week of March, the bigger picture suggests that warmer temperatures will return right behind the cold weather, cutting into demand for the heating fuel.

According to NatGasWeather.com, “Temperatures averaged over the next 7 days will be warmer than normal over the eastern half of the country, while cold over the West into the Plains. This will lead to lighter than normal national demand and higher than normal draws on supplies due to the South and East seeing highs of 50s to lower 80s. However, colder air is expected into the eastern half of the country March 6-12 for stronger than normal demand.”

Forecast

The main trend is down according to the daily charts, but since February 12, momentum has been trending higher.

The short-term range is $2.565 to $2.723. Its 50% level or pivot is $2.644. We should continue to see an upside bias as long as the natural gas market holds above this level.

Taking out $2.723 will signal a resumption of the short-covering rally. If this move can generate enough upside momentum then we could see a drive into the main retracement zone at $2.774 to $2.823.

The downside bias is expected to return if $2.644 fails as support.

Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly storage report, traders are looking for a draw of about 73 billion cubic feet (bcf) during the week-ended February 23.

That compares with a decline of 124 bcf in the preceding week, a build of 7 bcf a year earlier and a five-year average drop of 118 bcf.

Total natural gas in storage currently stands at 1.760 trillion cubic feet (tcf), according to the EIA.

That figure is 609 bcf, or around 25.7%, lower than levels at this time a year ago, and 412 bcf, or roughly 19.0%, below the five-year average for this time of year.