Natural Gas Price Fundamental Daily Forecast – Weekend Cold Could Trigger Short-covering Surge Over $2.774

Natural gas futures are trading higher on Tuesday in reaction to guidance that shows the emergence of a new weather system that is expected to bring cold to key demand regions in the United States this week-end. Some forecasts are also showing that the cold temperatures could potentially extend into March.

At 11:32 GMT, March natural gas is trading $2.677, up 0.035 or +1.32%.

The price action was volatile on Monday, but gains were muted after a gap-higher opening because spot gas prices were mixed. Activity in the spot market could remain subdued the remainder of the week until the cold hits this week-end. This could keep a lid on prices until after Thursday’s government storage report.

Short-Term Weather Outlook

According to NatGasWeather for February 12 to February 18, “A fast moving weather system will bring rain, snow and ice across the Midwest, Ohio Valley and East Tuesday to Wednesday, followed by a mild break late in the week. The West will be cool to cold and unsettled. The southern U.S. will be mild to warm with highs of 60s to 80s, although cooling Friday thru Saturday. This weekend and next weekend will see cold air across much of the U.S. with lows of -10s to 20s North and 20s to 40s over the South. Overall, national demand will be moderate through Thursday, then back to high Friday thru Sunday.”

Daily Forecast

Cold is forecast for the week-end, but it’s not expected to have that big of an impact on the storage deficit.

“While the coming cold shots into the northern and eastern United States February 16-23 aren’t as extreme as recent ones, they don’t have to be with five-year average storage draws dropping to 104 Bcf three weeks out and much easier to exceed,” NatGasWeather said.

Bespoke Weather Services remains slightly bullish. “Given additional cold risks down the road and expectations of gradual market tightening moving forward with imports still near low and exports back elevated, we still see risk skewed higher through the week,” Bespoke Weather Services chief meteorologist Jacob Meisel said.

The firm also sees risks again that storage could dip below 1.2 Tcf should cold linger into March. This is because production is still below recent highs.

Technically, things could get exciting for bullish traders if they are able to take out $2.774. This move would shift sentiment to the upside. Furthermore, if this creates enough upside momentum, we could see a near-term surge into at least $2.978.

Please let us know what you think in the comments below.