Natural Gas Price Fundamental Daily Forecast – Traders Watching Eight-to-14 Day Weather Forecast

Natural gas futures are trading inside the previous day’s range early Thursday, suggesting investor indecision and impending volatility. Who can blame them since we have a storage report later today and another cold weather system may be forming.

At 0912 GMT, April Natural Gas futures are trading $2.684, up 0.003 or +0.11%.

Some traders are saying this week’s strength can be attributed to oversold technical conditions and “less bearish weather”.

Although prices appear to be consolidating according to the daily chart, there is a slight upside bias developing. This price action could be partly attributed to a forecast of colder weather in the coming weeks, as the most recent eight-to-14 day outlook from the National Weather Service calls for colder-than-average temperatures along the West Coast and Rockies, with average temperatures expected along the East Coast, Midwest, Midcon and Texas.

Additionally, according to S&P Global Platts Analytics, U.S. demand is estimated to average 85.3 Bcf/d over the next eight-14 days, a 4 Bcf/d increase from the 81.3 Bcf/d averaged over the month of February last year.

Forecast

Last week, the U.S. Energy Information Administration (EI) announced an estimated 194 Bcf draw from storage for the week-ended February 9, above the 183 Bcf draw expected by a consensus of analysts, and well above the 154 Bcf withdrawal average over the past five years.

The withdrawal brought the national stock deficit to the five-year average to an estimated 18.7%, according to the EIA data.

Looking ahead to today’s EIA report, the market is expecting a 110 Bcf draw for the week-ending February 16. This will be slightly better than the -92 Bcf from last year and the -145 Bcf five-year average.

The daily chart continues to indicate that a sustained move over $2.661 will indicate the return of buyers. The buying could be short-covering and a little speculating. If the rally does gain traction, we could see a move into a key 50% level at $2.774. A test of this level is likely to be met with strong hedge fund selling.

A failure to drive prices well-above $2.661 will indicate that the market is still in the hands of strong short-sellers. This could lead to a retest of $2.565 and perhaps $2.487 over the near-term.

If the weather stays mild over the near-term then combined with ramped up production, we could see lower prices during the shoulder season and into the summer.