Natural Gas Price Fundamental Daily Forecast – Stubborn Cold Temps Could Lead to One More Storage Draw

Natural gas futures are trading slightly higher early Friday after yesterday’s rally confirmed the previous session’s technical reversal to the upside. The catalyst behind the strength was a weekly government report which showed a bigger-than-expected storage draw.

At 0742, June Natural Gas futures are trading $2.721, up $0.004 or +0.15%.

According to the U.S. Energy Information Administration, natural gas storage in the U.S. fell by 19 billion cubic feet in the week ended April 6, compared to forecasts for a decline of 11 billion.

Thursday’s data compared with a draw of 29 billion cubic feet (bcf) in the preceding week and represented a decline of 725 billion from a year earlier and was also 375 bcf below the five-year average.

Total U.S. natural gas storage stood at 1.335 trillion cubic feet, 35.2% lower than levels at this time a year ago and also 21.9% below the five-year average for this time of year.

Forecast

Despite the strength late in the week, June natural gas is still trading below its close last Friday at $2.747.

The main trend is down so the price action represents short-covering in response to a successful defense of a pair of main bottoms at $2.650 and $2.638.

The new short-term range is $2.810 to $2.660 which makes $2.735 to $2.753 a reasonable upside target. Since the trend is down, sellers are likely to come in on a test of this zone.

NatGasWeather.com for the period April 12 to April 18 predicts, “Warming will continue across the South Great Lakes and East on April 12 – 13 as highs reach the 60s to near 70 as far north as Chicago to New York City. However, a strong spring storm is developing upstream and will track through the Rockies with heavy snow, then powerful thunderstorms across the Plains and east-central U.S.”

“Temperatures behind the cold front will again drop into the teens to 30s for another round of stronger than normal demand. This strong system will then track into the East late Sunday and Monday.”

“The southern U.S. will remain mostly warm with highs of upper 60s to 80s, while the West sees a mix of mild and cool areas as weather systems track inland.”

“Demand will be low for a few days then back up to moderate-high.”

The near-term price action is likely to mirror the two-sided weather forecast which could lead to another storage draw. Despite this short-term development, traders remain confident that rising production, milder temperatures and lower demand will keep a lid on all rallies.