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Natural Gas Price Fundamental Daily Forecast – Upside Momentum Could Pick-Up on Trade Through $2.648

By:
James Hyerczyk
Published: Feb 15, 2019, 11:33 UTC

The market showed a muted response to the EIA numbers, but today’s price action suggests a slight reaction to expectations of strong demand this weekend through the middle of next week. However, gains are likely to be limited by reports of a milder trend coming in late next week through February 26.

Natural Gas

Natural gas futures are trading slightly higher early Friday after recovering from early session weakness. The main trend is down, but today’s rebound from $2.589 suggests aggressive counter-trend buyers may have come in to defend the main bottom at $2.565. Buyers could be reacting to new weather reports which showed cold weather returning during the last few days of February.

At 1106 GMT, April natural gas is trading $2.617, up $0.007 or +0.27%.

Natural Gas
Daily April Natural Gas

Short-Term Weather Outlook

According to NatGasWeather for February 15-21, “Mild conditions with highs of 40s and 50s will last for one more day across the East ahead of a cold front currently sweeping across the Midwest/Great Lakes where lows behind the front will drop into the -0s to 20s. The West will be cool to cold with areas of heavy rain and snow. The southern US will be warm with highs of 60s to 80s, although cooling Sunday-Tuesday with lows of teens to 30s. A stronger cold blast will push across the central and northern US Monday-Thursday with lows of -10s to 20s North and 20s to 40s over the South. Late next week, mild high pressure will build across the southern and eastern US with highs of 50s to 80s returning, warmest over the South/SE. Overall, national demand will increase to high-very high this weekend through much of next week.”

Weekly Storage Report

On Thursday, the U.S. Energy Information Administration reported that domestic supplies of natural gas fell by 78 billion cubic feet for the week ended February 8. That was pretty close to the consensus estimate of 80 Bcf. Total stocks now stand at 1.882 trillion cubic feet, down 30 billion cubic feet from a year ago and 333 billion below the five-year average, the government report showed.

 Daily Forecast

The market showed a muted response to the EIA numbers, but today’s price action suggests a slight reaction to expectations of strong demand this weekend through the middle of next week. However, gains are likely to be limited by reports of a milder trend coming in late next week through February 26.

New data shows that cold temperatures could return across the East on February 27 to March 1. This combined with generally chilly temperatures over the rest of the country could point to stronger national demand.

“The Global Forecast System (GFS) data was a little colder this run to add a few heating degree days, but likely isn’t going to be enough to intimidate unless it trends further colder, but would require the European model to trend colder as well. March futures haven’t been able to take out recent support of $2.55, so that’s the level bulls hope to hold and bears want to take out,” NatGasWeather said.

Technically, the main trend is down according to the daily chart. The range is $2.565 to $2.730. Its 50% level or pivot is $2.648. Holding below the pivot will signal the short-sellers are preventing a rally and may be playing for a move through the bottom at $2.565.

Overtaking $2.648 and sustaining the move will indicate that buyers are taking out the weaker shorts. However, don’t expect any substantial move to the upside until major buyers can take out a few of the major short-sellers over $2.730.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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