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Natural Gas Price Fundamental Daily Forecast – Traders Expecting Large Injection Next Week

By:
James Hyerczyk
Published: Apr 12, 2019, 11:53 UTC

Technically, the direction of the market on Friday is likely to be determined by trader reaction to the short-term retracement zone at $2.721 to $2.710. Look for an intraday upside bias to develop on a sustained move over $2.721, and for a downside bias to develop on a sustained move under $2.710.

Natural Gas

Natural gas futures are inching slightly higher on Friday, but in a tight range. Volume is low and the market is inside yesterday’s range, which suggests investor indecision and impending volatility. On Thursday, traders shrugged off the potentially bullish U.S. Energy Information Administration (EIA) weekly storage report, sending prices lower. Also contributing to the weakness was an outlook calling for significant improvement in storage deficits in the weeks ahead.

At 11:29 GMT, June Natural Gas is trading $2.723, up $0.015 or +0.55%.

In other news, Natural Gas Intelligence reported that “cash prices in the Permian Basin and in Western Canada continued to strengthen in an otherwise soft spot gas market where most other regions posted declines.”

Natural Gas
Daily June Natural Gas

U.S. Energy Information Administration Weekly Storage Report

According to the EIA, natural gas in U.S. storage facilities increased 25 Bcf to 1.155 Tcf in the week-ending April 5. The injection was smaller than the consensus estimates, which called for a 33 Bcf injection.

However, the actual injection of 29 Bcf was trimmed due to an EIA reclassification of working gas stocks comprising about 1 Bcf in the Pacific region and around 2 Bcf in the South Central salt-dome facilities.

Nonetheless, the build was still bearish compared with a 20 Bcf withdrawal reported in the corresponding week in 2018 as well as the five-year average injection of 5 Bcf, according to EIA data.

As a result, stocks were 183 Bcf, or 13.7%, under the year-ago level of 1.338 Tcf and 485 Bcf, or 29.6%, below the five-year average of 1.640 Tcf.

Short-term Weather Outlook

NatGasWeather for April 12-April 18 says, “A strong spring storm will exit the Midwest but with chilly conditions left in its wake with lows of 20s and 30s. The southern US will be very warm with highs of 70s to 90s, while mild over the West Coast with mostly 50s to 70s, coolest over the wetter Northwest. Another cool shot will sweep across the northern and central US this weekend into early next week with another round of lows of 20s and 30s for stronger national demand. A mild break between cold shots will set up late next week over the Great Lakes, Ohio Valley, and East with 60s & 70s. Overall, national demand will be moderate to locally high.

Daily Forecast

The early price action suggests the lack of sellers, but conditions could change late today or early next week because of expectations of increasing injections. “Continued loose balances point to another hefty injection versus the five-year average next week as well,” according to Bespoke. On Wednesday, Tudor, Pickering, Holt & Co. said there was a potential for the EIA to report a 100 Bcf-plus build, which would be five times the five-year average. Most analysts, however, are estimating a build closer to around 90 Bcf.

Technically, the direction of the market on Friday is likely to be determined by trader reaction to the short-term retracement zone at $2.721 to $2.710. Look for an intraday upside bias to develop on a sustained move over $2.721, and for a downside bias to develop on a sustained move under $2.710.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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