Natural Gas Price Fundamental Daily Forecast – Traders Anticipating Higher Demand Next Week

Natural gas futures bounced back from earlier losses to finish higher for the session on Thursday. The catalyst behind the price rise was a government report which showed supply fell a little less than expected.

May Natural Gas settled at $2.733, up 0.035 or +1.30%.

On Thursday, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas fell by 63 billion cubic feet for the week-ended March 23. Traders were looking for a draw of about 70 billion. The five-year average draw is 46 billion.

Working gas in storage was 1,383 Bcf as of Friday, March 23, 2018, according to EIA estimates. This represents a net decrease of 63 Bcf from the previous week. Stocks were 672 Bcf less last year at this time and 346 Bcf below the five-year average of 1,729 Bcf. At 1,383 Bcf, total working gas is within the five-year historical range.

Forecast

The rally on Thursday in reaction to a lower than expected drawdown suggests investors aren’t watching the stale government data, but instead are focusing on future weather forecasts.

The latest weather forecasts are calling for colder temperatures across the northern and eastern U.S. with highs of 20s to 40s for stronger than normal demand.

Overall, demand will be moderate, increasing to high next week.

The daily chart pattern looks bullish with the formation of the secondary higher bottom at $2.610 on March 26. This was also a technical closing price reversal bottom which typically means a shift in investor sentiment.

The short-term range is $2.831 to $2.610. Its 50% to 61.8% retracement zone is $2.720 to $2.747. This zone is currently being tested. Overtaking this zone will also indicate a shift in investor sentiment.

The main range is $2.951 to $2.600. Its retracement zone at $2.775 to $2.817 is the primary upside target. However, don’t expect an acceleration to the upside unless the buying is strong enough to sustain a rally over $2.831.