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Natural Gas Price Fundamental Weekly Forecast – Aggressive Short-covering Could Drive Prices into $2.774

The early forecast for this week’s U.S. Energy information Administration’s weekly storage report, covering the time period ending February 23, shows an expected draw of -65 Bcf.
James Hyerczyk
Natural Gas
Natural Gas

Forecasts for the return of colder weather during the early part of March and a bigger-than-expected storage draw helped support natural gas prices last week.

April Natural Gas futures settled the week at $2.657, up $0.059 or 2.27%.

According to the U.S. Energy Information Administration, natural gas in storage fell by 124 billion cubic feet (bcf) in the week ended February 16, above forecasts for a withdrawal of 121 bcf. That compared with a decline of 194 bcf in the preceding week, a fall of 89 bcf a year earlier and a five-year average drop of 145 bcf.

Total natural gas in storage currently stands at 1.760 trillion cubic feet (tcf), according to the EIA. That figure is 609 bcf, or around 25.7%, lower than levels at this time a year ago, and 412 bcf, or roughly 19.0%, below the five-year average for this time of year.

Weekly April Natural Gas

Forecast

The early forecast for this week’s U.S. Energy information Administration’s weekly storage report, covering the time period ending February 23, shows an expected draw of -65 Bcf.

That number compares with -7 Bcf last year, and the five-year average of -118 Bcf.

According to NatGasWeather.com for the time period February 26 to March 1, “A cool front will stall over the east-central U.S. with mild cool conditions over the Northeast, and very warm conditions over the Southeast. It remains cold with areas of snow over the western and central U.S., which will continue through next week.”

This week-end, high pressure was expected to expand over the South and East with mild conditions where highs reach the 50s and 80s, warmest over the Southeast.

“Modest cooling will finally reach the East at the end of next week. Demand overall the next week will be moderate.”

The weekly chart pattern suggests traders may be trying to form a support base. This is probably being fueled by short-covering and profit-taking due to oversold conditions.

A move through $2.565 will indicate that sellers have returned. This could drive prices into the next bottom at $2.487.

A trade through $2.701 will signal that the short-covering is getting stronger. There’s an outside chance that prices could reach $2.774 to $2.823, but because of the bearish fundamentals, a test of this area is likely to attract fresh short-selling.

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