Natural Gas Price Fundamental Daily Forecast – Five Days of Cold Temperatures Not Enough to Chase Away Bears

James Hyerczyk

Natural gas futures are trading higher on Tuesday after early sellers booked profits for mostly technical reasons, fueling some intraday short-covering. Once again, we appear to be looking at a situation where a series of cold spells were enough to help put in a bottom in mid-February, but too short-lived to generate any meaningful upside action.

At 13:56 GMT, April natural gas futures are trading $1.867, up $0.024 or +1.35%.

Short-Term Weather Outlook

According to NatGasWeather for February 25 to March 2, “several weather systems will impact the US today, although quite mild over most regions with highs of 40s to 70s for light demand. Colder exceptions will be across the Plains with highs of 20s to 30s. Much colder conditions will sweep across the Midwest Wednesday, then over the East Friday through Sunday for a surge in national demand as lows of -0s to 20s become widespread, including 20s and 30s into the South and Southeast. Overall, light demand to start the week, then high for the second half of the week through the weekend.”

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas fell by 151 billion cubic feet for the week-ended February 14.

Last year’s withdrawal was 163 Bcf and the five-year average draw is 136 Bcf, according to the EIA.

Total stocks now stand at 2.343 trillion cubic feet, up 613 billion cubic feet from a year ago, and 200 billion cubic feet above the five-year average, the government said.

Daily Forecast

The key level to watch remains $1.878.

Look for the bearish tone to continue on a sustained move under this level with $1.831 the first likely downside target.

Overcoming, $1.878 could trigger a short-covering rally, but the move will likely be stopped by resistance levels at $1.906 and $1.928.

After about five days of rather chilly temperatures across most of the country, mild high pressure is expected to come back around March 3 to March 7. Although national demand will likely increase during the five days or so of colder temperatures, traders are already focusing on the warm/bearish forecast during that first week of March.

This article was originally posted on FX Empire