Natural Gas

Natural Gas Price Fundamental Daily Forecast – Short Periods of Higher Demand Setting Up Next Shorting Opportunity

Natural gas futures are trading flat on Tuesday after posting a choppy, two-sided trade the previous session before closing higher. The market also posted an inside trading range, suggesting investor indecision and impending volatility. Monday’s price action was fueled by traders evaluating short-term periods of higher demand against mid-term expectations of milder weather and lower demand, which would likely lead to a series of potentially triple-digit injections.

At 07:33 GMT, June natural gas futures are trading $2.594, up $0.001 or +0.04%.

Cash gas prices were also moving higher with weather forecasts calling for late-season cold saps predicted for the northern United States.

Short-Term Weather Outlook

According to NatGasWeather for April 28 to May 4, “A weather system with rain and snow will track across the Midwest and Northeast Monday into Tuesday where lows will drop into the 20s to low 40s for stronger demand. A brief mild break will follow across the Midwest and East during mid-week with highs of 60s and 70s before another cool shot arrives next weekend. The southern US will be very warm with highs of 70s to lower 90s. Weather systems will also impact the West where it will be mild over the Northwest but still quite warm over the Southwest. Overall, national demand will swing between moderate & low.

Genscape, Inc. said, “The series of weather systems, seen lasting through the upcoming weekend, were expected to send Lower 48 demand to more than 70 Bcf/d on a couple of days this week before sliding into the weekend.

Daily Forecast

Technical factors could continue to drive natural gas prices higher for a couple of days with the first target zone coming in at $2.623 to $2.657. The market would have to overcome this zone to sustain a rally into another target at $2.709.

Given the mid- to longer-term fundamentals, every rally should be treated as a new shorting opportunity. This is because when looking at the bigger picture, “national demand is expected to remain light enough to continue the current streak of larger-than-normal builds for at least the next four U.S. Energy Information Administration weekly storage reports,” NatGasWeather said.

Furthermore, “There remain weather model differences where the European model remains cooler across the central and northern United States compared to the milder American model,” according to the forecaster. “The net result is still numerous builds over 100 Bcf into early June; it’s just a matter of by how much.”

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.