Natural Gas Price Fundamental Daily Forecast – Traders Keeping Powder Dry Ahead of EIA Storage Report

Natural gas futures posted a two-sided trade on Wednesday, first rallying to a one-week high before finishing lower for the session. Traders were keeping their powder dry ahead of Thursday’s U.S. Energy Information Administration’s weekly storage report.

February Natural gas futures settled at $2.906, down $0.144 or -4.72%.

Forecast

The market is trading slightly better early Thursday as investors continue to straddle a series of retracement levels as they position themselves ahead of the EIA report which is expected to show a withdrawal of 320 billion to 345 billion cubic feet for the week-ending January 5.

At 0943 GMT, February Natural Gas is trading $2.947, up $0.040 or +1.40%.

The range of withdrawal estimates indicates that the drawdown would surpass the record draw of 287 Bcf in the week-ended January 10, 2014, EIA data showed.

According to the EIA, the five-year average change for the week is a draw of 170 Bcf.

During the week-ending December 29, natural gas supplies fell by 206 Bcf to 3.126 trillion cubic feet, approximately 5.8% lower than the five-year average for this time of year.

According to NatGasWeather.com for the January 11 to 17 period, “mild conditions will remain over the southern and eastern U.S. today with highs reaching the 40s and 50s over the Great Lakes and Northeast, with 60s and 70s over the southern U.S. A fresh cold blast with rain and snow will impact the Rockies and Plains today, then advancing into the East this weekend through early next week with lows of -15 Fahrenheit to 20s. The NW will bring rain and snow, while milder and drier across the SW. Next week will be cold over the East with rain and snow. Overall, national demand will be increasing to high this week-end through early next week.”

The daily chart indicates a rangebound market. The trend is up, but momentum is sideways. A trade through $3.097 will signal a resumption of the uptrend. Taking this level out with rising volume could trigger a further move into $3.21 then $3.32.

On the downside, the trend changes to down on a move through $2.746.