Natural Gas, WTI Oil, Brent Oil Forecasts – Gas Futures Dip Amid Supply Glut

Natural gas futures are modestly down on Tuesday, with traders evaluating the balance between impending production cuts and the current ample supply. Although these cuts are expected to reduce supply during the upcoming summer cooling season, they’re unlikely to significantly influence current prices. Market expectations are leaning towards a lower-than-average withdrawal in this week’s Energy Information Administration (EIA) report, with early estimates suggesting a 46B draw. Contrastingly, last week’s EIA report showed a 96B draw, influenced by colder temperatures in certain regions.

NatGasWeather’s March 5-11 forecast highlights varying weather conditions across the U.S. The West will see a mix of rain, snow, and temperatures ranging from the 30s to 50s. In contrast, the eastern two-thirds of the U.S., including the Midwest and Northeast, will experience milder conditions with highs from the 50s to 70s, except for cooler 20s to 30s in the Northern Plains. The central, southern, and eastern regions will enjoy pleasant weather with highs between 50s and 80s until the weekend, when temperatures cool down due to a weather system bringing showers and highs of 40s to 60s. The overall demand is expected to be very light for the next four days, with a slight increase next weekend.

Crude oil futures experienced a second day of decline on Tuesday, unaffected by China’s commitment to stimulate its economy or OPEC+ production cuts. China announced a 5% growth target for 2024 and a plan to issue $138.9 billion in special treasury bonds for major projects. Meanwhile, OPEC and its allies decided to maintain their 2.2 million barrels per day production cut through Q2. This decision, largely anticipated, might have been factored into current market prices.

Concerns about China’s slowing economic growth and an oversupply of crude, particularly from the Americas and the U.S., have been pressuring oil prices. Additionally, a general risk-averse mood in financial markets, highlighted by record high gold prices and a decline in Wall Street, is affecting oil prices. However, a weakening U.S. dollar, following a slowdown in service sector growth, provided some support to oil prices as it makes oil cheaper for holders of other currencies.

Upcoming U.S. inventory reports are expected to reveal a 2.6 million barrel increase in crude stocks, with decreases in distillates and gasoline reserves. The American Petroleum Institute (API) is set to release its inventory data after 21:30 GMT, followed by the Energy Information Administration (EIA) with its weekly update on Wednesday at 15:30 GMT.

Technically, WTI crude oil futures are in an uptrend, support by the long-term moving average. If the downside momentum continues then look for a test of the 200-day moving average at $76.70. Trader reaction to this level should set the tone in the market for the rest of the week.