Natural Gas Price Fundamental Daily Forecast – Slight Change in Mid-Term Forecasts Encouraging Selling

James Hyerczyk
·2 min read

Natural gas futures are under pressure late Wednesday as a slight change in the mid-term weather forecasts may have spooked some traders into trimming long positions ahead of Thursday’s U.S. Energy Information Administration weekly storage report.

At 18:55 GMT, June natural gas is trading $2.778, down $0.025 or -0.89%.

Mid-Term Weather Outlook

The latest models continue to show stronger-than-normal national demand through the weekend as a series of chilly weather systems sweep across the country, according to NatGasWeather. These cold weather systems are forecast to drop overnight temperatures into the 20s to lower 40s.

However, major weather models also favor a more seasonal pattern over the United States April 27-May 2, which would keep daytime highs “comfortable” in the 60s to 80s. The forecaster said some areas in the Southwest and into Texas could see highs reach the 90s, but demand overall should fall to more seasonal levels.

“Essentially, as heating degree days fade across the northern U.S. in late April and early May, cooling degree days will increase over the southern U.S. to be the dominant driver of national demand as highs of upper 80s to 90s gain in territory, typical of mid-spring,” NatGasWeather said.

Bespoke Sees Lower Production

Natural Gas Intelligence (NGI) reported that production was lower again in Bespoke’s preliminary data, down to slightly under 88 Bcf because of spring maintenance. Liquefied natural gas (LNG) feed gas volumes were a bit lower as well, under 11.5 Bcf. Power burns remain weak, though this has been a consistent theme for weeks now, but has been negated by strong exports.

“In short, the $2.70-$2.75 range feels fair to us, in the near term,” Bespoke said. “If we do not see any loosening in balances, however, the door opens for another leg higher, based on what we are seeing in out longer-term storage modeling.”

Daily Forecast

The main trend is up according to the daily swing chart, but Tuesday’s technical reversal top and today’s confirmation of the chart pattern, shifted momentum to the downside.

The main range is $3.082 to $2.521. Its 50% to 61.8% retracement zone at $2.802 to $2.868 is resistance. This zone stopped the rally at $2.830 on Tuesday.

The new short-term range is $2.534 to $2.830. Its retracement zone at $2.682 to $2.647 is the primary downside target. Since the main trend is up, buyers could come in on a test of this area.

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This article was originally posted on FX Empire