Natural Gas Price Fundamental Daily Forecast – Traders Expect EIA Report to Show 88 to 91 Bcf Draw

Natural gas futures continued to straddle a key short-term technical retracement zone on Wednesday, however, after an early rally failed to gain traction, the market closed lower for the session.

May Natural Gas futures settled at $2.667, up $0.037 or -1.37%.

The close below the retracement zone is a sign of weakness and indicates that investors will likely be going into Thursday’s U.S. Energy Information Administration’s weekly storage report with a downside bias.

Forecast

Early Thursday at 0822 GMT, May Natural Gas futures are trading $2.679, up $0.012 or +0.45%.

Looking ahead to today’s U.S. Energy Information Administration storage report, we are expecting to see 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.

Even if the EIA report is bullish, any rally is likely to be limited because the coldest part of the winter season is effectively lower. Additionally, the current weather forecast is not very supportive.

According to the latest forecast from the National Oceanic and Atmospheric Administration, warmer-than-normal weather for much of the country from April through June could dominate the trade. This should hold prices in a range during that time period, but could fuel a strong short-covering rally if it leads to increased demand.

The daily chart pattern continues to indicate that a bearish bias could develop on a sustained move under $2.688 and a bullish bias could form on a sustained move over $2.716.