Natural Gas Price Fundamental Daily Forecast – Turns Bearish on Sustained Move Under $2.902

Natural gas futures are lower early Friday. The market is trading inside yesterday’s wide range as well as inside a major retracement zone. The price action indicates a rangebound market, driven by investor indecision.

At 1019 GMT, March Natural Gas futures are trading $2.956, down 0.033% or -1.20%.

Prices fell 1.19% on Thursday after government data showed that domestic supplies in storage fell less than estimated last week.

According to the U.S. Energy Information Administration, natural gas storage in the U.S. fell by 183 billion cubic feet (bcf) in the week-ended January 12. This was below forecasts for a withdrawal of 201 bcf.

That compared with the previous week’s record decline of 359 bcf, which was the highest on record, a fall of 243 bcf a year earlier and a five-year average drop of 203 bcf.

Total natural gas in storage currently stands at 2.584 trillion cubic feet (tcf), according to the EIA. That figure is 368 bcf, or around 12.5%, lower than levels at this time a year ago and 362 bcf, or roughly 12.3%, below the five-year average for this time of year.

Forecast

The charts indicate a rangebound market. Periodic cold snaps are being supportive, but forecasts calling for the return of mild weather are putting a lid on prices.

According to NatGasWeather.com, for January 19 to January 24, “Cold conditions linger across the eastern half of the U.S. in the wake of recent frigid blasts, including deep into the South and the Southeast. Lows will again drop into the single digits to 20s through Friday morning before moderating. The West will be mild over the Southwest, but with increasing storms into California and the Northwest. The eastern and southern U.S. will warm this weekend into next week as high pressure builds in, easing demand from very strong levels. Overall, national demand will be high easing this coming weekend to moderate.”

Traders may be starting to price in the return of warm weather next week. This combined with the weak EIA report could pressure prices.

The main range is $3.272 to $2.532. Its 50% to 61.8% retracement zone is $2.902 to $2.989. The market is currently trading inside this zone. Trader reaction to this zone will determined the near-term direction of the market. In other words, bullish on a sustained move over $2.989. Bearish on a sustained move under $2.902.