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James Hyerczyk
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Natural Gas

Natural gas futures are trading slightly higher on Wednesday, but inside yesterday’s range. The early price action suggests investor indecision and impending volatility. The market inched above the psychological $3.000 level on Tuesday, but there was not enough buying to sustain the attempted breakout. This suggests that buyers feel that it’s too early in the season for a rally, or there are still not enough bullish catalysts supporting a price surge at this time.

Despite the slow trade, the market remains well supported. This means bullish traders may take another run at $3.00. They have two choices: buy strength and play for a breakout, or buy the dip and hope the fundamentals remain supportive.

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At 14:03 GMT, June natural gas futures are trading $2.928, down $0.039 or -1.31%.

Short-Term Weather Forecast

According to NatGasWeather for May 5 to May 11, “Weather systems and associated cool shots with showers and thunderstorms will continue across the Midwest and Northeast into next week with highs of 50s and 60s, lows of 30s and 40s. Cooling will also push into Texas and the South/Southeast in the coming days with highs of 70s to low 80s for light demand, then warming back into the 80s and 90s late this weekend into next week. The West will see a mix of mild conditions over the Northwest with highs of 50s to 70s but very warm over the Southwest with highs of 80s to 90s. Overall, moderate the rest of the week.”

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Early Look at Thursday’s Energy Information Administration Storage Report

Natural Gas Intelligence (NGI) reported that for Thursday’s EIA storage report, a Bloomberg survey as of early Wednesday showed a median estimate for a 66 Bcf injection for the week ended April 30. That was based on 10 estimates ranging from 49 Bcf to 76 Bcf. Bespoke Weather Services said its predicting a 71 Bcf build.

Daily Forecast

The market could remain rangebound on Wednesday as traders continue to assess the latest short-term weather patterns and position themselves ahead of Thursday’s EIA storage report. However, prices are likely to hover around $3.000 as traders await further bullish information that could launch the next breakout rally.

Bespoke said, “The market likely needs a new bullish catalyst to break through the $3.000 level, be it from a bullish miss in tomorrow’s report, or cash prices that continue to gain strength.”

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

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