Natural Gas

Natural Gas Price Fundamental Daily Forecast – Weak on Diminished Concerns Over Storage

Natural gas futures are inching higher early Tuesday after touching a multi-month low earlier in the session. Sellers continue to press prices lower in response to confusion over short-term weather models and lower cash market prices.

At 12:00 GMT, March natural gas futures are trading $2.674, up $0.014 or +0.53%.

Short-Term Weather Outlook

According to NatGasWeather for February 5 to February 11, “Mild conditions will continue across the Ohio Valley and East through Thursday with highs of 40s and 50s. It will be exceptionally comfortable across the southern U.S. and Mid-Atlantic Coast with highs of 70s and 80s. The West will be stormy but only slightly cool. The coldest air will be confined to the Northern Plains where weather systems will trace through with highs of -0s to 20s, including rain and snow at times advancing across the rest of the Midwest. Cold air will return across the Midwest & Northeast Friday through Sunday with lows of -0s to 20s. Overall, national demand will be low through Thursday then increasing to high Saturday through Sunday.”

“The 8 to 15 day outlook (February 10-17) shows the Midwest & Northeast will see a mix of mild & cold conditions as weather systems. Overall, national demand will be low through Thursday then increasing to high Saturday to Sunday.”

Minimal Concerns Over Storage

The week began with total stocks at 2.197 trillion cubic feet, down 14 billion cubic feet from a year ago, but 328 billion below the five-year average, according to the U.S. Energy Information Administration for the week-ending January 25.

“A very bearish EIA number last week relative to expectations eased storage concerns and hit the entire gas strip as it remains clear that the market is easily loose enough to contend with any remaining storage deficit,” Bespoke Weather Services said.

Bespoke is also looking for a large storage draw on Thursday. However, “the number appears likely to be rather unimpressive on a weather-adjusted basis as supply increased around the cold shot and demand did not spike quite as much as expected,” Bespoke chief meteorologist Jacob Meisel said. With far smaller draws to follow, we see storage concerns as rather minimal at current prices overall.”

Daily Forecast

The price action the past four sessions indicates that time has run out for another run at higher prices this winter. If there is a rally, it’s likely to be short-covering related to technically oversold conditions and another shorting opportunity.

Please let us know what you think in the comments below.

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.