Natural Gas Prices Forecast: Traders Eyeing Mid-February for Demand Spike

Key Points

• U.S. Natural Gas Futures Dip, Weather Influences Demand
• Mid-February Weather Shift May Boost Natural Gas Demand
• Traders Alert: Potential Short-Covering Rallies in Natural Gas Market

Current Market Trends and Speculation Impact

U.S. natural gas futures are showing a downward trend on Monday, reversing earlier gains that were driven by expectations of increased demand due to anticipated colder weather at the end of February. This shift in the market stems from a lack of new buying interest and the resilience of short sellers.

At 13:53 GMT, Natural Gas Futures are trading $2.050, down $0.029 or -1.39%.

Short-Term Weather Outlook and Demand

The short-term weather outlook provided by NatGasWeather indicates a mix of rain and snow across the U.S., including a significant storm over California. With most regions experiencing near to warmer-than-normal temperatures, especially in the southern states, the national demand for natural gas remains very light. These mild conditions are expected to keep natural gas prices low in the immediate future.

Mid-February Weather Shift and Demand Projections

The weather forecast for mid-February points to a potential shift towards colder conditions, particularly from February 14-18, which could lead to moderate-to-high national demand for natural gas. Market attention is focused on the movement of polar air around February 15-22, as its path could greatly affect demand, particularly if it brings colder temperatures to the northern U.S.

EIA Reports and Market Sensitivity

Upcoming EIA reports are anticipated to show lighter-than-normal draws, possibly leading to an increase in surpluses. However, if the predicted colder weather in mid-to-late February materializes, it might lead to larger withdrawals, influencing natural gas prices. The market has historically reacted more strongly to bullish (colder) weather trends, making this a critical factor for traders to monitor.

Short-Term Market Forecast and Trader Alert

Fundamentals suggest a bearish trend for natural gas in the short term, driven by the current mild weather and low demand. However, traders should be cautious of potential short-covering rallies, which could be triggered by oversold conditions, especially if a shift to colder weather occurs towards the end of the month. This possibility underlines the importance of staying vigilant in this unpredictable natural gas market.

Technical Analysis

U.S. natural gas futures are putting in a mixed performance on Monday as traders try to adjust to varying weather forecasts. Although cold is predicted in some parts of February, the news is not likely to be a trend-changing event.

Prices continue to hover on both side of the downtrending 50-day moving average. This intermediate trend indicator seems to be controlling the near-term direction of the market.

Look for a bullish tone to develop on a sustained move over $2.083 and for the bearish trend to resume on a sustained move under this level.