Natural Gas Price Fundamental Weekly Forecast – Overall Demand Expected to Be Moderate to High This Week
Natural gas finished higher last week as investors reacted to a better-than-expected government storage report and the possibility of below average temperatures in several key demand areas during the early part of March.
Technically, the trend is down, but prices have been climbing since February 12. The transition from winter-to-spring is also contributing to the light-volume rally. However, the market is still being controlled by the strong hands of the short-sellers. This means that gains are likely to be limited.
April Natural Gas futures settled at $2.695, up $0.038 or +1.43%.
According to the U.S. Energy Information Administration, storage decreased 78 billion cubic feet (Bcf) to 1.682 trillion cubic feet (Tcf) in the week-ended February 23.
The withdrawal was greater than the 71 Bcf consensus forecast. The draw as much more than the 7 Bcf pull reported during the corresponding week in 2017, but less than the five-year average pull of 118 Bcf, according to EIA data.
As a result, stocks were 680 Bcf, or 28.8%, less than the year-ago level of 2.362 Tcf and 372 Bcf, or 18.1%, less than the five-year average of 2.054 Tcf.
Forecast
Early guesses show that this week’s EIA storage report should show a draw of 70 Bcf. Last year’s report for the same time period came in at -57 Bcf. The five-year average is 129 Bcf.
According to NatGasWeather.com for March 2 – 8, “A strong storm will bring rain, snow and gusty winds to the Northeast, although not very cold. The West will see an even more powerful storm as it moves inland with very heavy rain and snow. High pressure will return over much of the east-central U.S. Sunday – Monday, followed by colder weather systems with below normal temperatures and stronger demand the rest of the week. Demand overall will be moderate to high over the next week.”
The main trend is down according to the daily swing chart, but a support base may be building.
The main range is $2.983 to $2.565. Its retracement zone at $2.774 to $2.823 is the primary upside target. Sellers could come in on a test of this zone.
The short-term range is $2.565 to $2.731. Its 50% level or pivot at $2.648 has been acting like support. The short-term direction of the market is likely to be determined by trader reaction to this level.
Look for weakness on a sustained move under $2.648 with $2.565 the next likely downside target.
This article was originally posted on FX Empire