Natural Gas Price Fundamental Daily Forecast – Traders Bracing for Season’s First Triple Digit Build

Natural gas futures finished the week sharply lower after a government storage report showed a slightly larger than expected build. Favorable weather conditions and improving production are expected to continue to weigh on prices until cooling season demand returns although technical indicators show the market may have entered oversold territory.

For the week, June natural gas futures settled at $2.535, down 0.169 or -6.25%.

U.S. Energy Information Administration Weekly Storage Report

On Thursday, the U.S. Energy Information Administration reported that U.S. supplies of natural gas rose by 92 billion cubic feet for the week-ended April 12. Analysts were looking for an increase of 90 billion cubic feet for the latest week.

In 2018, the EIA reported a 34 BCF withdrawal, and the five-year average injection is 21 Bcf.

Total stocks now stand at 1.247 trillion cubic feet, down 57 billion cubic feet from a year ago and 414 billion below the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for April 18 to April 24, “Mild to warm conditions will continue across the East today with highs of 60s to 80s. The southern US will be very warm with highs of 70s to 90s, hottest across Southwest deserts. A weather system with showers and thunderstorms will track out of the central US and through the East Friday to Saturday, but only with minor cooling as highs reach the 50s and 60s. The western US will be mild to warm with 60s to 80s. Next week will be very comfortable across most of the US with upper 60s to 80s for very light demand besides the slightly hot southern US. Overall, national demand will be low.”

Looking Ahead….

With prices headed toward the psychological $2.50 level, the major concern for short-sellers is not the bearish fundamentals, but the technically oversold conditions. The current mild shoulder season has pushed bullish traders to the sidelines as they await the summer cooling season. This being said, if $2.50 is taken out with conviction then $2.00 becomes the next target.

Speculative buyers may be eyeing the $2.50 level for support, but I think they are going to wait for next week’s EIA report before stepping in. The EIA report for the week-ending April 19 is expected to show the season’s first triple-digit build.