James Hyerczyk
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Natural Gas

Natural gas futures are trading higher late Monday after touching its highest level since March 2 earlier in the session. The market is also testing a key 50% to 61.8% retracement zone that is controlling the near-term direction of the market. A combination of strong export levels and weekend forecasts calling for colder trends to continue, were the catalysts behind the rally.

At 17:29 GMT, June natural gas futures are trading $2.806, up $0.052 or +1.89%.

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NatGasWeather Short-Term Outlook

According to NatGasWeather for April 19-25, “Several colder than normal weather systems will track across the U.S. this week with rain, snow, and chilly lows of 20s to 40s for strong national demand, coldest over the Rockies, Northern Plains/Midwest, and interior Northeast. The southern U.S. will also see bouts of showers, although still mostly comfortable with highs of 60s to 80s. The West Coast will be nice to warm with highs of 60s to 80s besides hotter 90s Southwest deserts. Overall, demand will be high versus normal most of the next 7 days.”


Bespoke Weather Services Mid-Term Outlook

In its latest 15-day forecast Monday Bespoke Weather Services added nine gas-weighted degree days to its projections compared to expectations before the weekend.

A chillier shift from the European model on Friday “so far looks correct, as other guidance joined in on cooler changes for the balance of the month over the weekend,” Bespoke said. The cooler trends keep expected demand “on the above side of normal, though, again, at a low demand time of year.

“Still, demand is demand, and the change is on the bullish side of the spectrum, thanks mostly to increasing the intensity of this week’s shot of cooler air.”

Daily June Natural Gas

Daily Forecast

Technically, the main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out the March 11 main top at $2.807.

The main range is $3.082 to $2.521. June natural gas is currently testing its retracement zone at $2.802 to $2.868. This zone is potential resistance. It’s also controlling the near-term direction of the market.

The direction of the June natural gas futures contract into the close is likely to be determined by trader reaction to the 50% level at $2.802.

A sustained move over $2.802 sets up the possibility of a rally into the 61.8% level at $2.868. A sustained move under $2.802 could signal the start of a short-term correction of the rally from $2.534.

For a look at all of today’s economic events, check out our economic calendar.
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