Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $2.688 Will Determine Direction Today

Natural gas futures closed lower on Monday as investors chose to ignore the latest weather system hitting the Northeast and instead have probably decided to focus on improving conditions later in the month. Basically, traders are saying the current weather system is fast moving and not likely to lead to lingering sub-freezing temperatures. Furthermore, there is plenty of gas around so the demand will not be strong enough to substantially draw down supply.

Early Tuesday at 1106 GMT, May Natural Gas is trading $2.681, up $0.004 or +0.15%.

Forecast

With the coldest part of winter now history, it’s going to take a tremendous shift in temperatures to increase demand enough to drive prices substantially higher. According to historical data, demand for natural gas is usually at its lowest as temperatures gradually move from the cold of winter to the heat of summer. The seasonal chart shows peak demand usually takes place between November and March.

Traders expect this week’s U.S. Energy Information Administration storage report to show a draw of about 91 billion cubic feet (bcf) in the week ended March 16.

That compares with a decline of 93 Bcf in the preceding week, a fall of 150 Bcf a year earlier and a five-year average drop of 53 Bcf.

Total natural gas in storage currently stands at 1.532 trillion cubic feet (Tcf), according to the EIA.

That figure is 718 Bcf, or around 31.9%, lower than levels at this time a year ago, and 296 Bcf, or roughly 16.1%, below the five-year average for this time of year.

Technically, the key level to watch is $2.688. Look for the downside bias to continue on a sustained move under this level. Moving back above it will signal the return of buyers, however, the market has to overcome $2.716 with conviction to fuel a breakout to the upside.