Natural Gas Price Fundamental Daily Forecast – Warm Weather Outlook Expected to Keep Pressure on Prices

Natural gas futures are trading higher shortly after the opening on Tuesday on the thought that yesterday’s plunge may have been an overcooked reaction to forecasts calling for warmer temperatures over the near-term and the possibility that April will be warmer than normal. Additionally, spot gas price also fell sharply amid very light demand over the week-end.

At 13:12 GMT, May natural gas is trading $2.551, up $0.040 or +1.59%.

European, American Weather Models Turn Bearish

Over the three-day weekend, the European and American weather models both posted large degree day losses in Weeks 1 and 2 that led to projected demand contracting by 18 Bcf, according to EBW Analytics Group.

Bespoke Weather Services said, there is support for a cooler trough to move into the eastern United States toward the middle of the month. However, this is only expected to bring demand back up toward near-normal levels at this time, keeping April on pace to be yet another warmer-than-normal month” rather easily.

“While there can be some variability at times, our view is that the general warmer-than-normal regime will continue to roll along, which is bearish for a few more weeks, before cooling degree days begin to take over more as we get toward the middle part of May.”

US Energy Information Administration Storage Report

The EIA reported on Thursday that domestic supplies of natural gas rose by 14 Bcf for the week-ended March 26. That compares with an average increase of 19 Bcf forecast by analysts polled by S&P Global Platts.

Last year, the EIA recorded a 20 Bcf withdrawal for the period, while the five-year average is a pull of 24 Bcf.

Total stocks now stand at 1.764 trillion cubic feet, down 225 Bcf from a year ago and 36 Bcf below the five-year average, the government said.

Daily Forecast

The main trend is down according to the daily swing chart. A trade through $2.688 will change the main trend to up. A move through $2.459 will reaffirm the downtrend.

The minor range is $2.459 to $2.688. The May natural gas futures contract is currently straddling its 50% to 61.8% retracement zone. This area is controlling the short-term direction of the market.

Look for the market to strengthen on a sustained move over $2.574 with $2.622 a potential upside target.

The downside bias is likely to continue on a sustained move under $2.546 with $2.488 and $2.459 the next likely targets.