Natural Gas Price Fundamental Daily Forecast – Upside Bias Over $2.716, Downside Bias Under $2.688

Natural gas futures are trading lower early Friday after plunging the previous session in reaction to a bearish U.S. Energy Information Administration (EIA) weekly storage report.

At 0915 GMT, May natural gas futures are trading $2.708, down $0.004 or -0.15%.

The EIA reported on Thursday that natural gas storage in the U.S. fell by 93 billion cubic feet (Bcf) in the week-ended March 9. This was slightly below the estimate of 96 Bcf.

That compared with a draw of 57 Bcf the week-ending March 2 and represented a drop of 718 billion from a year earlier and was also 296 Bcf below the five-year average.

After the release of the report, total U.S. natural gas in storage stood at 1.532 trillion cubic feet (Tcf), 31.9% lower than levels at this time a year ago and also 16.2% below the five-year average for this time of year.

Forecast

The current weather forecast for March 16 to March 21, predicts high demand, but the price action suggests investors are looking well beyond this report.

NatgasWeather.com says, “Snow showers and gusty winds linger over the Northeast, only to be enhanced by a strong reinforcing cold shot Friday and Saturday. The West will see a barrage of weather systems that bring heavy rain and snow, along with colder than normal temperatures. The central and southern U.S. will be mostly mild to warm with highs of 60s to lower 80s. Another weather system will track across the east-central U.S. Tuesday thru Thursday of next week for another round of cold conditions and strong demand, including deep in the Southeast. Overall, demand will be high.”

This being said, the futures market is not likely to rally unless there is a spike in demand in the spot market and this may be difficult because professionals are already starting to price in a return to more average temperatures and weather conditions into the end of the month.

Technically, the main trend is down according to the daily swing chart. The trend turned both up and down this week.

The main range is $2.951 to $2.600. Its 50% to 61.8% zone stopped the rally earlier in the week when the market reached its high at $2.831.

The short-term range is $2.600 to $2.831. Its retracement zone is $2.716 to $2.688. This zone stopped the price slide on Thursday and is providing support early today.

Basically, we’re looking for an upside bias to develop on an extended rally over $2.716, and a downside bias to develop on a sustained move under $2.688.