Natural Gas Price Fundamental Daily Forecast – Sellers Trying to Drive Out the Last Stubborn Long

Natural gas prices continued to slide on Tuesday as the market hovered near a 29-month low. Weighing on prices were forecasts for milder weather and lower heating demand next week than previously expected.

At 14:04 GMT, April natural gas futures are trading $2.262, down $0.05 or -2.16%.

Short-Term Weather Outlook

According to NatGasWeather for Feb. 21-27:  “The West and Midwest will be cool to cold as chilly weather systems track through with rain, snow and lows of -0s to 30s.

Texas, the South, and much of the East will be under strong high pressure with very nice highs of upper 50s to 80s for light demand.

Frigid air over the Midwest will spread across the Ohio Valley and Northeast Friday-Saturday with areas of snow and lows of -0s to 30s for strong national demand, then easing Sunday – Tuesday as warmer temperatures return.”

Refinitiv Supply/Demand Outlook

Refinitiv said average gas output in the U.S. Lower 48 states fell from 98.3 bcfd in January to 97.4 bcfd so far in February, after extreme cold earlier in February froze oil and gas wells in several producing basins. That compared with a monthly record of 99.8 bcfd in November 2022.

Refinitiv forecast U.S. gas demand, including exports, would rise from 118.9 billion cubic feet (bcf) this week to 122.6 bcfd next week.

Those forecasts were lower than Refinitiv’s outlook on Friday.

Short-Term Outlook

We’ve said it a few times in February that the market is likely to continue to move lower until the last of the stubborn longs finally throws in the towel on this winter season. That will probably signal the “capitulation” that will allow the market to finally put in a short-term bottom.

It doesn’t matter how oversold the technical indicators are either. At this point in the sell-off, they are probably just going to become “coincidental” indicators. In other words, when the market finally makes a bottom, all the technical analysts will say, “Hey, my oversold indicator just picked the bottom.”

But we all know the tech guys have called this market oversold for weeks and have been just feeding the Bear

EBW Analytics Group analyst Eli Rubin said, “Fundamentally, the gas market still needs to clear another pair of extraordinary bearish EIA reports before the storage flattens.”

Finally, look for volatility to return with the upcoming options expiration and final settlement of the March contract later this week.