Natural Gas Price Fundamental Daily Forecast – Higher Close Will Indicate Selling Pressure is Weakening

Natural gas futures are trading nearly flat on Friday, shortly before the regular session opening, after hitting a new contract low earlier in the session. Even at multi-year lows, the selling pressure is so strong that even a relatively large storage withdrawal as reported by the government on Thursday, can’t stop the market from heading lower.

At 12:49 GMT, March natural gas futures are trading $1.832, up $0.003 or +0.16%.

Natural Gas Intelligence, citing a report from Bespoke Weather Services said, “With the overnight European weather data ‘strongly backing away from the idea of an upper-level ridge around Alaska’ and thus ‘keeping alive the seemingly endless warmer regime,’ bears were able to take control heading into Thursday’s trading.”

Bespoke went on to say, “Prompt-month prices were pushed to new lows despite an EIA number that, while being on par with expectations, confirmed that the supply/demand balance is quite tight. Given what we see in the data this week, we should see a strong number next week as well, at least on a weather-adjusted basis.”

“…The problem remains that the warmer pattern is still keeping demand low enough to overwhelm the tight balances, and as long as that is the case, we can continue making new lows.”

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas fell by 201 billion cubic feet for the week-ended January 24. That was below the 207 Bcf forecast by analysts at S&P Global Platts.

Bloomberg analysts issued a median prediction for a 197 Bcf withdrawal. A Wall Street Journal survey and a Reuters survey averaged minus 195 Bcf. The Natural Gas Intelligence model predicted a 210 Bcf withdrawal.

Total stocks now stand at 2.746 trillion cubic feet (Tcf), up 524 Bcf from a year ago, and 193 Bcf above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for January 30 to February 5, “Several weather systems will impact the US this week, although none cold enough to impress. One mild system will exit the Southeast today, while cooler one’s impact portions of the West. Additional mild to cool systems will track across the country this weekend and next week. Overall, highs will be in the 30s to 50s across the northern US, locally 20s, with 40s to 70s across the southern US. But with frigid air remaining in Canada the next 7-days, national demand will be lighter than normal.”

Daily Forecast

Unless the weather surprises over the week, the downtrend is likely to continue early next week. Closing higher on Friday will indicate the selling is getting weaker, or the buying stronger. The momentum will shift to up on a move through 1.957.