Natural Gas Price Fundamental Daily Forecast – Traders Watching Possible Development of Third Storm

Natural gas futures finished lower on Thursday after a government report showed a smaller-than-expected draw in natural gas supply. Traders were also influenced by a potentially bearish daily chart pattern. The price action also suggests that the current forecast for colder temperatures may have been fully-priced into the market.

April Natural Gas futures settled at $2.756, down $0.021 or -0.76%.

According to the U.S. Energy Information Administration, domestic supplies of natural gas fell by 57 billion cubic feet (Bcf) for the week-ended March 2. Traders and analysts were looking for a draw of 59 Bcf.

The five-year average withdrawal is 129 billion. Total stocks now stand at 1.625 trillion cubic feet (Tcf), down 680 billion cubic feet from a year ago, and 300 billion below the five-year average, government data showed.

Forecast

The main range is $2.983 to $2.565. Its retracement zone is $2.769 to $2.819. This zone was the primary upside target and since the main trend is down on the daily chart, we were looking for sellers to show up on a test of this zone.

On Thursday, the market hit a high of $2.793 before forming a potentially bearish closing price reversal top.

The closing price reversal top was confirmed early Friday. This could lead to the start of a 2 to 3 day correction, or a 50% correction of the current rally.

The short-term range is $2.565 to $2.793. If the selling pressure continues, the natural gas market could break into its retracement zone at $2.679 to $2.652 over the near-term.

The latest forecast from NatGasWeather.com for March 9 – 15, says “Overall, demand will be strong with the system over the East to end this week, and the new one next week. Overall, demand will be high with two notable weather systems into the eastern U.S.”

Although the market looks weak, prices may firm again on a pullback into $2.679 to $2.652 if buyers get some support from the weather. And this is possible since some weather models are forecasting another storm to hit the East Coast early next week. This would be the third coastal storm in 10-days, following Storms Riley and Quinn.

However, it’s a little too early to determine its potential impact.