Natural Gas Price Fundamental Daily Forecast – Weather Remains Bearish; Reaction to $2.459 Sets the Tone

Natural gas prices are trading flat on Wednesday after closing lower the previous session during a volatile two-sided trade, which saw the market give back earlier gains. The weak close has put the market in a position to challenge its March 18 bottom at $2.352. This is the last support before the December 28 bottom at $2.352.

At 06:15 GMT, May natural gas futures are at $2.468, up $0.012 or +0.49%.

About the price action, Natural Gas Intelligence (NGI) writer Leticia Gonzales wrote:  “The perfect storm of factors that led to Monday’s dramatic sell-off along the NYMEX natural gas futures curve reversed course on Tuesday, prompting a modest rebound in prices. However, the May contract quickly sold off after failing to overcome strong resistance.”

Short-Term Weather Forecast

According to NatGasWeather for April 7 -12, “A very light demand pattern will continue the rest of this week as high pressure rules much of the U.S. with highs of 50s to 70s across the northern U.S. and 70s and 80s across the southern U.S. Slightly cooler exceptions will occur over the Rockies as a weather system brings rain and snow, while hotter exceptions will bring highs of 90s over the Southwest deserts into Southern Texas. Additional weather systems will track across the southern and eastern U.S. late this weekend and early next week but still quite mild with highs of 50s to 70s. Overall, very light demand this week.”

Early Peek at This Week’s Energy Information Administration Storage Report

Early estimates for this week’s EIA storage report are pointing to an injection near 20 Bcf. A preliminary survey by Bloomberg showed injection estimates ranging from 19 Bcf to 23 Bcf, with a median build of 21 Bcf. NGI’s model pegged the build at 23 Bcf.

The EIA reported last week 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.

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

Trader reaction to the March bottom at $2.459 could set the tone early Wednesday. If it holds, we could see a short-covering rally with some of the weaker shorts jumping out of their positions. If this level fails as support then look for the selling to possibly extend into the December bottom at $2.352 over the near-term.

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

For a look at all of today’s economic events, check out our economic calendar.