Natural Gas Price Fundamental Daily Forecast – Upside Momentum Could Drive Market into $2.774

Oversold conditions and concerns over the return of colder temperatures is helping to drive natural gas futures higher on Monday.

At 1134 GMT, April Natural Gas futures are trading $2.720 or up $0.063 or +2.37%.

According to NatGasWeather.com for the February 26 to March 4 period, “A weak cool front will push through the eastern U.S. with showers Monday, but still milder than normal with 40s and 50s north, with 60s and 70s south. The West will be cool and unsettled this week as weather systems sweep through, at times pushing into the Plains. With the South and East relatively mild this week, national demand will be lighter than normal. Cooling will finally push into the eastern U.S. next weekend for a modest increase in demand, but not strong. Demand overall for the next week will be Moderate to Low.”

Forecast

After forming a support base since the February 12 bottom at $2.565, the market is finally breaking out to the upside. Given the bearish supply/demand fundamentals, today’s rally is likely being driven by aggressive speculative buying and short-covering.

The early forecast for this week’s U.S. Energy information Administration’s weekly storage report, covering the time period ending February 23 is expected to show a draw of -65 Bcf.

That number compares with -7 Bcf last year, and the five-year average of -118 Bcf.

The main range is $2.983 to $2.565. If the upside momentum continues over the near-term then we’re likely to see a rally into its retracement zone at $2.774 to $2.823. We’ll be looking for sellers to show up on a test of this zone.