Natural Gas Weekly Fundamental Analysis, April 25 – April 29, 2016 -Forecast

June Natural Gas futures posted a whopping 12.92% gain last week, finishing at $2.255, up $0.258, in the face of slowing production and long-term outlooks for warmer-than-normal weather. All of this took place despite rather bearish news from the U.S. Energy Information Administration.

The EIA reported a 7 Bcf build to gas inventories for the week-ending April 15, above market expectations of around 3 Bcf. However, the size of the build pales when compared to last year’s 82 Bcf build for the week.

The price action suggests that traders are expecting more rebalancing over the course of the summer. Currently, storage remains at record levels, but the level of injections is well below last year, indicating that rebalancing is taking place. Traders are banking on working gas in storage to continue to exit so that by the end of the summer, we could be at five-year lows, assuming normal weather.

Driving the market higher at this time is short-covering and speculative buying. Increased chart and technical analysis related buying is also helping to underpin the market and create upside momentum.

However, the momentum is likely to begin to subside as the market moves towards previous resistance levels such at $2.3235 and 2.4425. Gas prices are likely to remain under pressure until supply and demand are more in balance. This could occur if natural gas demand increases or if gas production declines.

Over the short-run, the market is likely to find support if the weather continues to remain warmer than normal for this time of year. This should lead to increase power plant demand which will contribute to a faster rebalancing.

Natural Gas weather outlook:

April 20 – April 26: A Spring storm remains stalled over the eastern Rockies and Plains with showers and thunderstorms that are spreading into the Great Lakes and eastern US. It will remain warm over the southern US with highs of 70s and 80s, while still quite mild fairly far up the East Coast. Slight cooling will arrive with showers from a weather systems providing glancing blows of cooler air and showers across New England, this weekend and again next week.

The West will be warm and dry with high pressure dominating until this weekend when Pacific systems return with showers and cooling. Overall, besides cooler temperatures over the upper Great Lakes and New England, it will be quite comfortable across the country for near to lighter than normal demand through this weekend.

Overall, much of the country will experience LOW natural gas demand.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Economic Events: (GMT)

WEEKLY

Natural Gas Weekly Update

Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)

Weekly Natural Gas Storage Report

Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)