Natural Gas Price Prediction – Prices Hold Support as Rig Count Fales

Natural gas prices moved lower on Friday, despite a 2-rig drop during the current week. Prices pushed through support but rebounded to close above support levels. The weather is expected to be warmer than normal for the next 2-weeks throughout the middle of the United States. A weaker than expected Chicago PMI also weighed on natural gas prices.

Technical Analysis

Natural gas prices moved lower on Friday, initially breaking through support near an upward sloping trend line that comes in near 1.83. Resistance is seen near the 10-day moving average at 1.89. Short term support has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 18, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

Rig Count Declines

Baker Hughes reported that the number of active U.S. rigs drilling for natural gas declined by 2 and oil declined by 15 to 222 this week. The oil-rig count has now fallen for 11 weeks in a row, suggesting further declines in domestic natural gas output. The total active U.S. rig count, meanwhile, also fell by 17 to 301, according to Baker Hughes.

Natural Gas Weekly Price Forecast – Natural Gas Markets Continue Sideways Disruption

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Natural gas markets initially tried to rally during the trading week but found the $2.00 level to be far too much in the way of resistance. That is an area that I think continues to be remarkably interesting to traders, but ultimately this is a market that looks as if it is trying to find some type of bottoming pattern. At this point, I think that we are likely to see a move down towards the $1.60 level before the buyers start to return.

It is difficult to deal with this type of action from a longer-term standpoint, simply because there is so much in the way of choppy behavior. Having said that, there is a lot of support underneath at the $1.50 level from a longer-term perspective as well, so I think we are in the process of at least trying to form some type of bottom, but the question is whether or not it can hold. I do not anticipate much in the way of momentum either way, so I would probably lead you towards the daily charts more than anything else.

If we break above the $2.13 level, which is the 50 week EMA, then obviously that would be a major shift in attitude as it is a large technical barrier. Breaking above there allows the market to go looking towards the $2.50 level. We need to see economies opening up a driving up demand in order to drive natural gas price higher. So far, it has been lackluster, but we should get plenty of bankruptcies to help as well.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Soften Into the Weekend

Natural gas markets initially tried to rally during the day on Friday, but you can see that we have pulled back a bit, reaching below the $1.80 level. There is a significant amount of support to the downside extending all the way to the $1.60 level though, so it is likely that we will continue to see buyers given enough time. With that in mind, I like the idea of looking for some type of bounce that I can take advantage of, but right now I do not see it. That is okay, we are heading into the weekend so it is difficult to imagine a scenario where traders would be willing to get overly bullish anyway. Ultimately, given enough time I do expect that we will see buyers coming back in but that is probably a story for next week.

NATGAS Video 01.06.20

At this point in time, a little bit of patience is probably needed. Ultimately, I do think that we are trying to form some type of “rounded bottom”, which is always an exceptionally long term and messy affair. Because of this, I think that the market is still very noisy, so therefore small position sizing will be crucial, but I do think that we will have a little bit more clarity somewhere during the week next week. In the short term, simply waiting for the setup is probably the best way going forward. Ultimately, there is not much to do rather than wait.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Fall Following Larger than Expected Inventory Build

Natural gas prices dropped nearly 3% on Friday as inventories built more than expected. Strong production despite continued declines in rig count, has kept natural gas prices on their heels. The weather is expected to remain warmer than normal for most of the United States which should increase cooling demand. Softer than expected Durable goods order likely reduced natural gas demand. Orders for durable goods, plunged 17.2% in April after dropping 16.6% in March.

Technical Analysis

Natural gas prices dropped on Thursday declining nearly 3% but bouncing near support which is an upward sloping trend line that comes in near 1.82. A close below this level would likely see a decline to the June contract lows at 1.60. Resistance on natural gas is seen near the 10-day moving average of 1.89. The 10-day moving average recently crossed below the 50-day moving average which means that a short term downtrend is now in place. Short term momentum is negative as the fast stochastic generated a crossover sell signal. The current reading of the fast stochastic is 5, well below the oversold trigger level of 20 which could foreshadow a correction.

Inventories Rise More than Expected

Natural gas in storage was 2,612 Bcf as of Friday, May 22, 2020, according to the EIA. This represents a net increase of 109 Bcf from the previous week. Expectations were for a 107 Bcf build according to survey provider Estimize. Stocks were 778 Bcf higher than last year at this time and 423 Bcf above the five-year average of 2,189 Bcf. At 2,612 Bcf, total working gas is within the five-year historical range.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Going Sideways

Natural gas markets continue to be noisy, as we had a relatively tight trading session on Thursday. Ultimately, the market is likely to see more noise, as there are multiple factors out there that can continue to push this market wildly. The 50 day EMA of course attracts a lot of attention, and therefore it will be interesting to see where we resolve this issue. Having said that, I think that is likely that we will see a lot of erratic behavior in the market.

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To the downside I think that the $1.80 level is likely to offer a certain amount of support, so I am looking for short-term pullbacks in order to buy the contract for short-term trades only. Ultimately, the market is trying to build a larger basing pattern from what I can see, as economy start to open up again. Ultimately though, the question will come down to whether or not the demand finally picks up enough to take out the massive oversupply. We also have bankruptcies coming so that could help as well. We are at extremely low levels so I do anticipate that the market will try to bounce but it is not going to be extremely easy to deal with.

With that in mind, even if we do break down below the $1.80 level, it is likely that we will see the previous gap at the $1.70 level also offering it. If we can break above the $2.00 level, then it is likely that the market will then go looking towards the 200 day EMA just above.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Traders Looking for EIA to Report Triple-Digit Build

Natural gas futures are trading lower on Thursday ahead of the regular session opening at 12:00 GMT and the release of the government’s weekly storage report at 14:30 GMT. On Wednesday, the market firmed for a second session shortly after the opening, but gains were quickly erased and prices plunged into the close as traders expressed concerns over weaker export demand and another large weekly storage injection.

At 07:27 GMT, July natural gas is trading $1.857, down $0.029 or -1.54%.

US Energy Information Administration Weekly Storage Report Estimates

Natural Gas Intelligence (NGI) is reporting that ahead of the release of the government data, a Bloomberg survey of three analysts produced a range of estimates from 99 Bcf to 126 Bcf, with a median of 103 Bcf. Reuters polled 16 analysts, who had the same range of estimates but arrived at a median of 106 Bcf. NGI projected a 110 Bcf build, which is on par with last year’s 110 Bcf injection but well above the five-year average build of 93 Bcf.

Working gas in storage was 2,503 Bcf as of Friday, May 15, 2020, according to EIA estimates. This represents a net increase of 81 Bcf from the previous week. Stocks were 779 Bcf higher than last year at this time and 407 Bcf above the five-year average of 2,096. At 2,503 Bcf, total working gas is within the five-year historical range.

NGI Sees Bearish Problems with Liquefied Natural Gas

“Ongoing concerns related to U.S. liquefied natural gas (LNG) exports also remain a massive headwind for pricing. Although NGI data shows that the feed gas volumes for Wednesday were higher day/day, deliveries were still well off late-March highs at around 6.5 Bcf/d, and the outlook for summer remained rather bleak,” NGI said.

“More than 30 U.S. LNG cargoes have been canceled for June, and international prices are signaling that oversupply conditions will linger for a while, even when accounting for any increased demand in the wake of COVID-19,” NGI added.

Short-Term Weather Outlook

Weather models continued to warm, with the overnight data being “a touch hotter” for the June 5-7 period across the southern United States due to upper high pressure strengthening, according to NatGasWeather.

However, models still favor the upper ridge weakening June 8-11, and this is where the national pattern needs to be hotter, the firm said. “Again, the data isn’t quite as bearish as Friday’s data and needs close watching, as it wouldn’t take much hotter trends to look increasingly bullish.”

Daily Forecast

A bearish EIA storage report is likely to drive prices into the two main bottoms at $1.822 and $1.802. The selling pressure may even be strong enough to reach the upper $1.70’s area.

However, you have to be careful about shorting aggressively at new lows because speculative buyers may show up. They’re likely to be betting on the return of hotter temperatures.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Whipsaw and Drop as Momentum Remains Negative

Natural gas prices whipsawed initially moving higher but then reversing into the close of the trading session. The weather is expected to remain much warmer than normal throughout most of the mid-west for the next two weeks, and as the pattern moves west to east, the warm weather is expected to head toward the east coast. It appears that the slow drop in natural gas active rigs is making a dent in the volume of natural gas that is currently produced.

Technical Analysis

Natural gas prices made a higher high and then close near the lows, slicing through short term support, which is now resistance near the 10-day moving average at 1.90. Additional support is seen near the July contract lows at 1.84.

Short term momentum has turned negative after turning positive on Tuesday. The flip flop crossover signals generated by the fast stochastic is a sign of consolidation. Medium-term momentum is still negative but it’s decelerating. The MACD (moving average convergence divergence) histogram is printing in the red with a flattening trajectory which points to consolidation.

Natural Gas Production Slows

The supply of natural gas dropped as natural gas production falls, according to data from the EIA. The average total supply of natural gas fell by 1.9% compared with the previous report week. Dry natural gas production decreased by 2.1% compared with the previous report week. The average net imports from Canada increased by 1.0% from last week. The drop in natural gas rigs across the US is now putting a dent in supply.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Shy Away From Two Dollars

Natural gas markets have gone back and forth during the trading session on Wednesday as we could not break above the $2.00 level, an area that of course is psychologically important. Even if we do break above there, it is likely that the market will probably go towards the $2.09 level, and then eventually try to break out above there. Having said that, I do not think it happens in the short term and quite frankly I believe that the natural gas markets are being buoyed by a couple of different things.

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The first thing of course is the fact that we are going to get a lot of bankruptcies in the drillers, perhaps as many as 200 companies. Another thing that helps natural gas is the fact that economies are opening up, and people are looking to buy energy in general. I do not think that is enough to send the markets skyrocketing, but clearly, we are trying to form some type of bigger “rounded bottom.” Looking at the downside, the 50 day EMA offer support just as the $1.80 level does due to the fact that it has shown itself to be resilient as of late.

Ultimately, this is a market that I think will continue to go back and forth it makes a nice day trading opportunity for a lot of traders out there who are patient enough to wait until we get to the outer reaches that signify the $0.20 range that the market has been stuck in as of late.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – June Futures Expiration Could Lead to Heightened Volatility

Natural gas futures are up for a second session on Wednesday as aggressive counter-trend buyers continued to defend the two main bottoms at $1.822 and $1.802 and now a new higher main bottom has formed at $1.832.

Chart-watchers will not that the trend changes to up on a move through $2.027, but the move is likely to attract a new wave of selling pressure following a test of $2.093 to $2.157.

At 10:47 GMT, June natural gas futures are trading $1.965, up $0.020 or +1.03%.

The catalysts behind this week’s strength are expectations of increased demand as economies reopen amid the coronavirus pandemic and as weather models boosted heat in the coming weeks.

Natural Gas Intelligence (NGI) reported that spot gas prices climbed following the Memorial Day holiday weekend, with sharp gains on the East and West coasts driving up NGI’s Spot Gas National Average 17.5 cents to $1.685.

Despite the early strength this week, gains may be limited by technical factors with the expiration of the June futures contract causing heightened volatility. Meanwhile, the current weather patterns are potentially bullish, but this optimism is being offset by lower production, which remains more than 10 Bcf below winter highs.

Short-Term Weather Outlook

According to NatGasWeather for May 27 to June 3, “Hot high continues across California and the Southwest with record setting highs of 90s and 100s, locally 110s across Southwest deserts. However, this will be effectively countered by the rest of the US experiencing mostly comfortable highs of upper 60s to 80s. This includes Texas, the South, and Southeast where weather systems will stall this week with heavy showers and thunderstorms. A late season weather system will sweep across the Northeast late this weekend with showers and slightly cool highs of 60s and 70s.”

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 81 billion cubic feet for the week-ended May 15. That figure matched the average increase forecasted by analysts polled by S&P Global Platts.

Total stocks now stand at 2.503 trillion cubic feet, up 779 billion cubic feet from a year ago, and 407 billion cubic feet above the five-year average, the government said.

Daily Forecast

This week’s developing rally may tell us if the traders are no longer following the “sell the rally at the front of the curve” strategy. A rangebound trade or a “stopper at $2.101 to $2.163 will tell us the strategy is still intact.

However, a sustained move over a $2.027 and an eventual takedown of $2.101 to $2.163 will indicate the selling is getting weaker and the buying stronger.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Rebound but Remain Rangebound

Natural gas prices rose nearly 4%, ahead of Wednesday’s June contract expiration. This comes as demand declines in the latest week driven by soft commercial heating demand. Hedge funds added to long position in futures and options according to the CFTC. The increase was approximately 16K contracts, while nothing was added to short positions. Currently the open interest shows that managed money is 16K longer futures and options. The open interest is 216K long versus 200K short. The weather is expected to be cooler than normal on the east coast which is likely to reduce cooling demand.

Technical Analysis

Natural gas prices moved higher on Tuesday, ahead of Wednesday change of the prompt contract to July. Support is near the 10-day moving average at 1.73. Target support on natural gas is seen near the May lows at 1.60. Resistance is seen near the 50-day moving average seen near 1.84. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. This followed a recent sell signal which is likely a sign of consolidation. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory that points to consolidation.

Demand  is Down

Demand falls, driven by low heating demand in buildings. Total U.S. consumption of natural gas fell by 10.0% compared with the previous report week, according to the EIA. Gains in the electric power sector were more than offset by low demand for heating in buildings because of seasonal spring temperatures. In the residential and commercial sectors, consumption declined by 40.8% after a cold snap last week that increased heating demand. Industrial sector consumption decreased by 3.8% week over week. Natural gas consumed for power generation climbed by 11.3% week over week. Natural gas exports to Mexico increased 2.5%.

Natural Gas Price Forecast – Natural Gas Markets Continue to Grind

Natural gas markets have gone back and forth during the trading session on Tuesday, as traders came back to work in full force. The natural gas markets continue to be very noisy, but the candlestick for the day is bullish. The 50 day EMA looks to be incredibly supportive, and therefore it would not surprise me at all to see a continuation towards the $2.00 level. Etiquette this point it is likely that we will see buyers on dips, as natural gas has been oversold for far too long. Ultimately, I believe that we are trying to get towards the 200 day EMA which is closer to the $2.10 level.

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If we break down below the lows of the last couple of days, it is likely that we will try to fill that gap again, and at that point I would be more than willing to start buying again. I like the idea of going long natural gas, but I also recognize that you cannot hang on to major positions for long timeframe type of set ups, because quite frankly there is still going to be a major problem with demand. At this point, I believe that the market continues to see a lot of volatility and offers plenty of short-term trading opportunities on these dips. I would not put a lot of money into this market though, because quite frankly it is a market that is still trying to figure itself out. Bankruptcies coming in the United States seems to be one of the main drivers of this market to the upside.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Favorable Production Numbers Likely Behind Price Spike

Just like last Monday, natural gas prices are trading sharply higher on expectations of lower production and increased demand with the economy opening up and as we approach the summer cooling season.

Lower production is likely the primary driver of the rally. One catalyst behind expectations of lower production is the natural gas drilling rig count. The U.S. natural gas rig count held steady to finish the week ending Friday (May 22) at 79 units, while the overall domestic tally continued to grind lower on oil retrenchment, the latest numbers from Baker Hughes Co. (BKR) showed, and Natural Gas Intelligence (NGI) reported.

With U.S. operators sending 21 oil-directed rigs packing, the combined domestic rig count ended the week at 318, down 665 units from its year-ago tally. The U.S. count has now plummeted by 474 rigs since March 13, according to BKR and NGI.

At 13:06 GMT, July natural gas is trading $1.934, up $0.053 or +2.82%.

Short-Term Weather Outlook

According to NatGasWeather for May 26 to June 2, “Hot high pressure will rule California and the Southwest the next several days with record setting highs of 90s and 100s, locally 110s across Southwest deserts. However, this will be effectively countered by the rest of the U.S. experiencing mostly comfortable highs of upper 60s to 80s. This includes Texas, the South, and Southeast where weather systems will stall this week with heavy showers and thunderstorms. A cooler trending late season weather system will sweep across the Northeast late next weekend.”

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 81 billion cubic feet for the week-ended May 15. That figure matched the average increase forecasted by analysts polled by S&P Global Platts.

Total stocks now stand at 2.503 trillion cubic feet, up 779 billion cubic feet from a year ago, and 407 billion cubic feet above the five-year average, the government said.

Daily Forecast

With the weather patterns offsetting each other for the time being, the focus for traders has shifted once again to production. Although I haven’t seen the numbers, the price action suggests there were bullish production numbers over the weekend. This story is likely to underpin the market throughout the session.

Like previous rallies, we’re still looking for the major players to step in and stop the move because of the huge supply. Only a change in the forecast to hot will lead to an extended rally. In the meantime, the production cuts are likely to have a more bullish effect on the deferred contracts covering next winter.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Markets Do Nothing During Holiday Session

Natural gas markets have gone back and forth during the trading session on Monday as traders will be focusing on Memorial Day more than anything else. At this point in time, it is likely that the market is going to continue to see noisy trading, as the 50 day EMA is currently right in the middle of the last couple of candlesticks. Ultimately, the market looks as if it is trying to build up some type of base, perhaps trying to trade back and forth between the 50 day EMA and the 200 day EMA which is closer to the $2.10 level.

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Keep in mind that there is a major gap underneath that could offer quite a bit of support, and in fact already has. The question now is whether or not we are trying to turn the turned around? At this point in time it still looks to be possible, and it should be noted that the markets have been rather resilient, especially considering just how oversupplied we are with natural gas in general.

However, we have a whole slew of bankruptcies coming out that will bring down supply. Ultimately, this is a market that will be very noisy, but it certainly seems to favor the upside more than anything else. If we can break above the 200 day EMA, then it is likely that the market is going to continue to reach towards much higher levels, just as a break down below the $1.50 level could be negative.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Weekly Forecast – Rangebound Until Demand Starts to Pick-Up

Natural gas futures edged higher last week with most of the gains attributed to last Monday’s “gap and go” rally which was the result of a steep drop in production numbers from the previous week. The market was under pressure most of the week, however, but not enough to erase those earlier gains. The settlement was only slightly above a pair of bottoms at $1.822 and $1.802.

Last week, July natural gas futures settled at $1.881, up $0.048 or +2.62%.

After the initial rally, traders seemed to forget about the drop in production and prices retreated. Prices even fell after the release of an uninspiring government storage report on Thursday. Spot gas prices also moved lower across the country amid a lack of widespread heat.

US Energy Information Administration Weekly Storage Report

On Thursday, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 81 billion cubic feet for the week-ended May 15. That figure matched the average increase forecasted by analysts polled by S&P Global Platts.

Total stocks now stand at 2.503 trillion cubic feet, up 779 billion cubic feet from a year ago, and 407 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

Bespoke Weather Services pointed out that when the smoke clears, the prompt month continued to be stuck in a range as it rallies off the $1.60 – $1.65 level, but then gets sold once above $1.90, Natural Gas Intelligence (NGI) reported.

“Given the uncertainties ahead regarding production, LNG, and of course how much demand comes back” amid the coronavirus, “we may well continue to simply trade in this range with some sharp moves, but no logical reason to deviate from said range,” said Bespoke. “We also have June expiration” on Wednesday, “which could promote some erratic moves as well.”

With only pockets of heat so far this summer, widespread cooling demand doesn’t appear to be in the cards until mid-June at the earliest. The latest weather models shifted cooler in the eastern United States for early June in the wake of a weak trough passing through the region, Bespoke said. This includes in Texas, where an upper-level weakness could result in more rainfall for the next couple of weeks, “blunting heat attempts there, though keeping wind rather low in the process,” according to the forecaster.

“Toward mid-June, we suspect some heat expands eastward, though that is beyond the 15-day time frame for right now,” Bespoke said.

Weekly Forecast

The bullish production news that drove prices sharply higher last Monday, seems to have gone away. Meanwhile, bullish traders are still waiting for the demand from the easing of coronavirus restrictions to kick in. Traders are also waiting to see the La Nina pattern that could determine whether the summer will be hotter than usual.

Looking ahead to the next government report, analysts at Tudor, Pickering, Holt & Co. (TPH) see week/week demand down around 4.3 Bcf/d, driven by lower residential/commercial loads but partially offset by higher power burns as cooling demand begins to pick up.

“Thankfully, the supply side has come off meaningfully as well, preventing what could have been a very ugly storage print. EQT’s removal of 1.4 Bcf/d of supply from the market was the key piece, with Texas volumes also down around 1.Bcf/d week/week, contributing to an aggregate drop of about 2.6 Bcf/d.”

Look for a sideways to lower trade with periods of unexpected short-covering price spikes. This type of price action is likely until we get a stronger summer weather pattern or a better outlook for demand as coronavirus-related restrictions until to ease.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Edge Lower as Gas Rig Count is Steady

Natural gas prices were nearly unchanged on Friday following news that natural gas rigs were unchanged according to Baker Hughes. The oil service giant reports the rig count each week. This week Baker Hughes reported that the number of oil and gas rigs in the US fell again this week by 21 a than 68% drop off in a single year. The total number of active gas rigs in the United States held at 79 according to the report. This compares to 186 rigs a year ago. With oil rigs continuing to move offline, prices should eventually find a bottom. The weather in the US is expected to be normal for the next 2-weeks, with some portions of the south getting cooler than normal weather.

Technical Analysis

Natural gas prices were nearly unchanged on Friday and notched up a 5.3% gain for the week. The first 2-trading session of the week was positive, but they were offset by down days on Wednesday and Thursday. Support is near the 10-day moving average at 1.74. Target support on natural gas is seen near the May lows at 1.60. Resistance is seen near the 50-day moving average seen near 1.84. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory that points to consolidation.

Natural Gas Weekly Price Forecast – Natural Gas Markets Struggle at Round Figure

Natural gas markets have shown a proclivity to try and break the two dollars level again but failed during the week. It should be noted that I am looking at the July contract now as we have rolled over. That being said, this is a market that faces a lot of headwinds due to the fact that the supply is so overdone. However, we are going to see some bankruptcies in the United States that could help things. The weekly candlestick is forming a bit of a shooting star and does suggest that perhaps we could go a bit lower. That being said, the 50 week EMA is above at the $2.14 level, so it makes quite a bit of sense that we could see that offer selling pressure as well.

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If we break down below the bottom of the weekly candlestick, I will anticipate a move to the bottom of the previous weekly candlestick. Below there, then the market opens up for a move to the $1.50 level. That of course is the “bottom” of the market, and I do not think we would go much further than that. If we can turn around a break above the 50 week EMA however, that would be very bullish sign and perhaps open up the possibility of a move towards the $2.50 level above. This market continues to be slanted to the downside but we are at extraordinarily low levels in general so that should be kept in mind.

Natural Gas Price Forecast – Natural Gas Markets Continue to Wander

Natural gas markets have drifted a little bit lower during the trading session on Friday, as we continue to dance around the 50 day EMA. Natural gas markets of course have been a bit soft, but we are starting to see signs of support in general. The market is trying to bottom due to the fact that we have seen a lot of potential bankruptcies coming down the road in the United States, and as a result it is highly likely that the supply will dwindle a bit. However, we have also been seen a lot of cargo shipments canceled lately, and that suggests that perhaps the market still has a lot of work to do before getting rid of the oversupply situation.

NATGAS Video 25.05.20

In looking at the chart, the $1.80 level looks to be rather supportive, so if we were to break down below there it is likely that we will go looking towards the bottom of the candle from a couple of weeks ago that opens up the door to the $1.70 level. On the other hand, if we break above the top of the candlestick from the Friday session it opens up the possibility of a move towards the $2.00 level, an area that is obvious as a large, round, psychologically significant figure. Furthermore, the 200 day EMA above is at the $2.09 level, so it is also possible that the market is going to be trapped between these two moving averages. Ultimately, the market is likely to continue to see a lot of choppiness.

Natural Gas Price Fundamental Daily Forecast – Lower as Traders Shrug Off Friendly EIA Storage Report

Natural gas futures are edging lower on Friday but still holding above a pair of major bottoms at $1.822 and $1.802. There was little follow-through to the downside after Thursday’s sharp break. Yesterday’s sell-off came as a surprise since the weekly government storage report came in on the low end of estimates.

On Friday, July natural gas futures are trading $1.850, down $0.002 or -0.11%.

Spot gas prices also moved lower across the country on Thursday amid a lack of widespread heat. Natural Gas Intelligence’s National Average dropped 15.0 cents to $1.540.

With summer heat not expected to show up for another month, traders were watching yesterday’s government report to see the impact of the recent cold weather shock in the North. However, the numbers came in nearly as expected, encouraging disappointed bullish traders to liquidate their speculative positions.

US Energy Information Administration Weekly Storage Report

On Thursday, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 81 billion cubic feet for the week-ended May 15. That figure matched the average increase forecasted by analysts polled by S&P Global Platts.

Total stocks now stand at 2.503 trillion cubic feet, up 779 billion cubic feet from a year ago, and 407 billion cubic feet above the five-year average, the government said.

Natural Gas Intelligence (NGI) reported that Bespoke Weather Services, which had projected an 85 Bcf injection, said it wasn’t reading much into the latest EIA figures despite the miss, as it was a “very heavy” heating degree day week and marked the end of any possible influence of heating demand.

“It does represent a little balance improvement, but far more important will be the trend in the next few EIA numbers, as this week’s data has shown some demand coming,” Bespoke said. “Low global prices keep concern alive for further liquefied natural gas slowdowns, however.”

Short-Term Weather Outlook

According to NatGasWeather for May 22 to May 28, “A stalled weather system remains across the east-central US with showers and thunderstorms, although rather comfortable highs of upper 60s and 70s. A second system is bringing showers to the Northwest with slightly cool highs of 50s and 60s. Over the central US and Texas, high pressure is resulting in very warm to hot highs of 80s and 90s. This weekend into next week will bring near ideal temperatures of 70s and 80s across the northern US, while warm over the South and Southeast U.S. with 80s to lower 90s. Heat will build over California and the Southwest with highs of 90s and 100s for locally strong demand, while mostly light elsewhere.”

Daily Forecast

Other than profit-taking or short-covering ahead of the week-end, traders don’t have a huge incentive to buy at this time. The bullish production news that drove prices sharply higher on Monday, seem to have gone away. Meanwhile, bullish traders are still waiting for the demand from the easing of coronavirus restrictions to kick in. Traders are also waiting to see the La Nina pattern that could determine whether the summer will be hotter than usual.

Natural Gas Price Prediction – Prices Drop Despite Smaller than Expect Build in Inventories

 

Natural gas prices moved lower on Thursday despite a smaller than expected build in natural gas inventories. After two robust days where prices rallied, natural gas has given back most of its gains. The weather is expected to be warmer than normal over the next 2-weeks, but during the shoulder months, there is little impact on natural gas demand.

Technical Analysis

Natural gas prices moved lower on Thursday following the EIA inventory report. Prices dropped 3.3%, and slipped back through support near the 10-day moving average at 1.74 which is seen as short term resistance. Target support on natural gas is seen near the May lows at 1.60. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is negative to neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory which points to consolidation.

Inventories Rise Less than Expected

The Energy Information Administration reported that natural gas in storage was 2,503 Bcf as of Friday, May 15, 2020. This represents a net increase of 81 Bcf from the previous week. This compares to expectations that natural gas stockpiles would rise by 98 Bcf. Stocks were 779 Bcf higher than last year at this time and 407 Bcf above the five-year average of 2,096 Bcf. At 2,503 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Fundamental Daily Forecast – EIA Build Comes in as Expected

Natural gas futures are trading sharply lower late in the session on Thursday, erasing nearly all of this week’s gains while putting the market in a position to challenge last week’s low at $1.822 and the March 18 main bottom at $1.802.

Earlier today, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 81 billion cubic feet for the week-ended May 15. That figure matched the average increase forecasted by analysts polled by S&P Global Platts.

Total stocks now stand at 2.503 trillion cubic feet, up 779 billion cubic feet from a year ago, and 407 billion cubic feet above the five-year average, the government said.

According to Natural Gas Intelligence (NGI), Bespoke Weather Services, which had projected an 85 Bcf injection, said it wasn’t reading much into the latest EIA figures despite the miss, as it was a “very heavy” heating degree day week and marked the end of any possible influence of heating demand.

“It does represent a little balance improvement, but far more important will be the trend in the next few EIA numbers, as this week’s data has shown some demand coming,” Bespoke said. “Low global prices keep concern alive for further liquefied natural gas slowdowns, however.”

Short-Term Weather Outlook

According to NatGasWeather for May 21 to May 27, “A slow moving weather system remains across the east-central US with heavy showers and thunderstorms, although rather comfortable highs of upper 60s and 70s. A second weather system is bringing rain and snow showers to the Northwest with slightly cool highs of 50s and 60s. Over the central US and Texas, high pressure is resulting in very warm to hot highs of 80s to 90s. This weekend into next week will bring near ideal temperatures of 60s to 80s across the northern US, while very warm over the southern US with 80s to 90s, hottest Southwest deserts. Overall, light demand besides where locally hotter over the Southwest into Texas.”