Natural Gas

Natural Gas Price Fundamental Daily Forecast – Rangebound: Support $2.551 to $2.534, Resistance $2.623 to $2.657

Natural gas prices are trading slightly higher on Friday, putting the market in a position to challenge this week’s high at $2.615. The market is also in a position to finish higher for the week. Today’s trade is bucking the early forecast, which called for a lower trade.

The market is likely being underpinned by the latest weather models calling for a slight increase in demand. According to Bespoke Weather Services, the American and European datasets are adding a mix of both heating degrees days (HDD) and cooling degree days (CDD) for the next couple weeks.

At 14:12 GMT, June natural gas futures are trading $2.596, up $0.001 or +0.01%.

“Demand for the upcoming week is now basically normal, though boosted more by HDDs in the north, as CDDs remain slightly below normal due to cooling from Texas across the remainder of the South,” Bespoke said. “As an upper level trough becomes more pronounced over the West in week two, warmth spreads into the eastern half of the nation, leading to slightly higher demand with 85-90 degree temperatures across the southeast quadrant of the nation.”

“Models do weaken the eastern warmth at the end of week two, however, bringing demand back toward normal levels as we move into the Memorial Day weekend,” the weather experts said.

U.S. Energy Information Administration Weekly Inventories Report

On Thursday, the EIA reported an above-average 85 Bcf weekly injection into U.S. natural gas stocks, matching the 85 Bcf build recorded for the year-ago period but larger than the 72 Bcf five-year average. Total Lower 48 working gas in underground storage stood at 1,547 Bcf as of May 3, 128 Bcf (9.0%) more than year-ago levels but 303 Bcf (minus 16.4%) below the five-year average.

Daily Forecast

The price action suggests this market is being technically driven today.

The main trend is down according to the daily swing chart. The main trend will change to up on a trade through $2.626. A move through $2.477 will signal a resumption of the downtrend.

The main range is $2.768 to $2.477. Its 50% to 61.8% retracement zone is providing resistance at $2.623 to $2.657. This zone stopped the rally May 1 at $2.626. Buyers will have to overcome this range in order to breakout to the upside.

The short-term range is $2.477 to $2.626. Its retracement zone at $2.551 to $2.534 is support. This zone was tested throughout the week.

Basically, in order to continue to generate the current upside momentum, aggressive counter-trend buyers are going to have to keep coming in at $2.551 to $2.534. This will help build a potentially bullish secondary higher bottom.

If successful, it could create enough upside momentum to challenge the next retracement zone at $2.623 to $2.657. The buying is going to have to be strong enough to overcome this area in order to trigger a breakout to the upside.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.