Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $1.833 Sets the Tone

Profit-taking and position-squaring ahead of the release of the government’s weekly storage report is helping to pressure natural gas prices on Thursday. Traders are also shrugging off forecasts calling for milder temperatures while shifting their focus to tighter balances.

Natural Gas Intelligence (NGI) reported that Bespoke Weather Services said it’s possible the market would more easily “shrug off” what figures to be weak weather-driven demand ahead.

At 14:57 GMT, April natural gas is trading $1.812, down 0.015 or -0.92%.

U.S. Energy Information Administration Weekly Storage Report

This week’s estimates are indicating a near-average withdrawal from Thursday’s weekly EIA storage report.

A Reuters poll shows a withdrawal of 108 Bcf for the week-ended February 28, while a Wall Street Journal survey showed a 109 Bcf pull. Bloomberg estimates a median withdrawal of 110 Bcf. Traders anticipate this week’s pull to come in at 88 Bcf to 117 Bcf. NGI’s model predicted a 106 Bcf withdrawal.

Last year, EIA recorded a 152 Bcf withdrawal for the similar week, and the five-year average pull of 106 Bcf.

Short-Term Weather Outlook

NatGasWeather for March 5-11 says, “A weather system with heavy showers will track across the South and Southeast the next few days, although with only modest cooling as highs still reach 50s to 70s. The northern US remains milder than normal with highs of 40s and 50s, locally 30s.

However, a quick cold shot will sweep across the Midwest and East Friday through Saturday with lows of 10s to 30s for a modest bump in national demand. Mild conditions with highs of 40s to 80s will return to rule most of the US late this weekend through next week for a return to very light demand. Overall, light versus normal demand the next 7-days, just slightly better Friday through Saturday.

Daily Forecast

The main trend is down. Its range is $2.024 to $1.642. The retracement zone of this range is $1.833 to $1.878. This zone is the primary upside target. It was tested early today when the market surged into $1.847.  Sellers came in to stop the rally.

The new short-term range is $1.642 to $1.847. Its retracement zone at $1.744 to $1.720 is the new downside target area.

Based on the early price action, the direction of the April natural gas market will be determined by trader reaction to the 50% level at $1.833.

A sustained move over $1.835 will indicate the presence of buyers. This could trigger a surge into $1.847 then $1.878.

A sustained move under $1.833 will signal the presence sellers. If this move creates enough downside momentum then look for the selling to possibly extend into $1.744 to $1.720