Natural Gas Price Fundamental Daily Forecast – Strengthens Over $1.851, Weakens Under $1.805

Natural gas futures are trading slightly lower on Tuesday as traders continue to assess the impact of the coronavirus outbreak on future demand, and as weather-trends lean toward the mild side.

The price action suggests traders are betting on expectations of widespread coronavirus containment to continue to weigh on demand. Meanwhile, in its latest forecast, NatGasWeather noted a drop in heating demand expectations overnight from the American and European datasets but with “no major changes” to the overall pattern.

“As is, it would take colder trends for next week and beyond for the pattern to be considered cold enough, though still with just enough demand across the northern U.S. to be considered seasonal,” NatGasWeather said. “But with the overnight data losing a little demand, the natural gas markets could notice.”

At 14:53 GMT, May natural gas is trading $1.837, down $0.014 or -0.66%.

Energy Aspects Updates First Quarter Storage Carryout

Energy Aspects recently updated its end-March storage carryout projection to 1.99 Tcf, with near-term fundamentals remaining relatively steady over the past week despite the volatility in markets, Natural Gas Intelligence (NGI) reported.

“The present set of fundamentals does not currently support” the $1.90/MMBtu-plus pricing that was observed last week, Energy Aspects said. “There are risks to lower demand stemming from even greater congestion issues” in the global liquefied natural gas market, as well as “uncertainties linked to the spread of Covid-19 and its impact on demand.

“In addition, impacts to domestic demand including industrial demand and the power sector cannot be ruled out…To be fair, weaker crude prices, if sustained, would have a real bearing on associated production volumes, but that move would really begin to take hold later in 2020 and then in 2021.”

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through $1.657 will change the main trend to down, while a move through $2.044 and $2.060 will signal a resumption of the uptrend.

The minor trend is up. A move through $1.801 will change the minor trend to down.

The momentum shifted to the downside when the March 11 closing price reversal top at $2.044 was confirmed late last week.

The main range is $2.229 to $1.657. Its retracement zone at $1.943 to $2.010 is resistance.

The minor range is $1.657 to $2.044. Its retracement zone at $1.851 to $1.805 is potential support. The market is current testing this zone.

Daily Forecast

Based on the early price action, the direction of the May natural gas futures contract the rest of the session on Tuesday is likely to be determined by trader reaction to the minor Fibonacci level at $1.805.

A sustained move under $1.805 will indicate the presence of sellers. Taking out $1.801 could trigger an acceleration to the downside.

Overtaking $1.851 will signal the return of buyers. This could lead to a test of $1.9225, followed by $1.943.