Natural Gas Weekly Price Forecast – Natural Gas Markets Continue to Show Negativity

Natural gas markets have broken down significantly during the week, slicing through the $1.80 level. That’s an area that has been supportive in the past, and at this point the fact that the market has broken down suggests that we are going to go lower. The oversupply of natural gas continues to be a major problem with this market, as fracking continues to produce way too much. Furthermore, the warmer temperatures coming does not help the situation, and beyond that we have received a very bearish inventory report this past week, so at this point it’s likely that we will see plenty of sellers. The question now is whether or not we can break down below the $1.60 level, and if we do that would be quite remarkable.

NATGAS Video 02.03.20

To the upside, the market could very well try to reach towards the $1.80 level before selling off again, or perhaps even the $2.00 level. I have no interest in buying this market, because quite frankly this is a market that has been far too oversold for far too long to believe that it is suddenly going to change its tune. With warmer temperatures, and oversupply of natural gas, and quite frankly now the worry about the coronavirus killing off demand, it’s very unlikely that this market will be able to recover anytime soon. It is going to take several bankruptcies in the United States when it comes to natural gas suppliers and drillers in order to bring down the commodity supply. At this point, market participants continue to sell rallies.

Natural Gas Price Forecast – Natural Gas Markets Fall Yet Again

Natural gas markets have broken down a bit during the trading session on Friday again, as the market continues to show signs of weakness. Quite frankly, the oversupply of natural gas doesn’t seem to be going the way anytime soon, and therefore I think that rallies will continue to be sold. We are starting to see a little bit of a bounce late in the day but that’s probably just people taking profits into the weekend.

NATGAS Video 02.03.20

The inventory figure this week was miserable, showing that there is not enough demand still. The lack of demand by the markets for natural gas continues to hamper any type of price appreciation, but quite frankly we have much bigger issues than that now. The oversupply simply is going nowhere until there are bankruptcies in the United States. We are about to see massive credit issues for a lot of the companies that have been supplying the market was so much natural gas, and that will force bankruptcies. That in turn will eventually disrupt supply, something the market desperately needs. Until then, it’s all but impossible to buy this market, because quite frankly there are too many things working against it.

Furthermore, the weather in the United States continues to be warming up, and that will drive down demand as well. At this point in time, there’s nothing good about this market in fading the rallies continues to be a major issue. The $1.80 level would be the first place at be looking to sell on signs of weakness, followed by the $2.00 level after that. In fact, I see the $0.20 region as an entire barrier that will be broken.

Natural Gas Price Fundamental Daily Forecast – May Be Overcooked; Don’t Get Caught Shorting Weakness

Natural gas futures hit a multi-year low on Friday, strongly suggesting the winter heating season is over and traders are ready to move on to the spring. Besides the weather, traders are also blaming the steep losses this week on coronavirus fears.

Another catalyst behind Friday’s rout is the loss of 22.3 gas-weighted heating degree days (gHDD) from the American model over the past 24 hours, according to forecaster DTN, which adjusted its latest forecast to warmer ahead of Friday’s opening.

At 14:39 GMT, April Natural Gas is trading $1.722, down $0.30 or -1.71%. The low of the session so far is $1.642.

U.S. Energy Information Administration Weekly Storage report

On Thursday, the EIA reported that domestic supplies of natural gas fell by 143 for the week-ending February 21. Total stocks now stand at 2,200 trillion cubic feet, up 637 billion cubic feet from a year ago, and 179 billion cubic feet above the five-year average, the government said.

Going into the report, traders were looking for a larger-than-average withdrawal for the week-ending February 21.

A Bloomberg survey predicted withdrawals ranging from 145 Bcf to 165 Bcf, with a median of 156 Bcf. Polls by the Wall Street Journal and Reuters produced similar results, while NGI’s model projected a pull of 152 Bcf.

The EIA recorded a 167 Bcf draw for the similar week last year, while the five-year average withdrawal stands at 122 Bcf.

Daily Forecast

Now that the market has hit its multi-year low at $1.642 and winter has been officially put to bed (aside from a few pockets of cold weather than tend to pop up in March) speculators can kick back and relax. What this means is that a few of the major short-sellers are likely to start booking profits so there exists the possibility of a meaningful short-covering rally over the near-term.

Start watching for signs of a bottom like a lower-low, higher-close, commonly known as a closing price reversal bottom. Turning higher on a move over yesterday’s close at $1.752 can produce such a move.

Don’t get complacent if short. This market can turn higher in a hurry if the short-sellers start to take profits. The next rally may have nothing to do with the weather.

Natural Gas Price Prediction – Prices Tumble Following Inventory Draw Miss

Natural gas prices tumbled 3.7% on Thursday following a smaller than expected draw in natural gas inventories according to a report from the Department of Energy. Much warmer than expected weather is expected to cover the eastern portion of the United States, and then moderate slightly over the next 8-14 days. The decline in LNG exports in the latest week, due to the lack of manufacturing activity in China continues to weigh on prices.

Technical Analysis

Natural gas prices moved lower on Thursday closing a fresh lows for the move after hitting 1.719 and poised to test the 2016 lows at 1.61. Resistance on natural gas prices is seen near the 10-day moving average at 1.86. Additional resistance is seen near the 50-day moving average at 2.015. Short term momentum remains negative as the fast stochastic heads lower and is poised to test oversold territory. The current reading on the fast stochastic is 23, just above the oversold trigger level of 20. Medium term momentum is above to turn negative as the fast stochastic is poised to generate a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Stockpiles Fall Less Than Expected

Natural gas in storage was 2,200 Bcf as of Friday, February 21, 2020, according to the EIA estimate. This represents a net decrease of 143 Bcf from the previous week. Expectations are for a 158 Bcf draw. Stocks were 637 Bcf higher than last year at this time and 179 Bcf above the five-year average of 2,021 Bcf. At 2,200 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Natural Gas Markets Plumbing Again as Inventory Number Disappoints

The natural gas markets continue to show signs of resistance to any move higher as the market shows a large amount of oversupply is still a major problem. The market continues to see a lot of negativity every time it tries to rally, and therefore it’s likely that we could go much lower. The $1.60 level underneath is a major level of support from a longer-term standpoint, so that might be where we are heading.

NATGAS Video 28.02.20

The inventory figure during the trading session on Thursday was very disappointing, as it was -143 billion instead of the expected -158 billion. In other words, we are not burning through the supply quick enough and then to add more fear is the fact that the coronavirus may slow down a lot of industrial use for natural gas, just as temperatures will be warming up in the northern hemisphere. In other words, there is nothing to think that this market is going to be able to rally for a significant amount of time, with perhaps the exception of the occasional spike higher due to the inevitable cold snaps that we get at the end of the wintertime. That’s a short-term opportunity for buyers, but quite frankly sets up a nice selling opportunity for those who are a little smarter about it.

Eventually, we will have the bankruptcies necessary to bring down the supply, but we aren’t there yet. Low natural gas prices continue to decimate the profits of any of the companies that are involved in this market, and things continue to look extraordinarily bleak. Selling rallies continues to be how I trade this market.

Natural Gas Price Fundamental Daily Forecast – Prices Plunge on Huge Shift Toward Milder Temperature Trends

Natural gas futures are plunging on Thursday, shortly before the release of the U.S. Energy information Administration’s weekly storage report. The move came as a surprise to some who were banking on the return of cold weather over the short-term and firmer cash prices to provide support. The steep drop is also likely to offset a bullish EIA report because it shouldn’t really matter much to traders what happened last week.

At 15:17 GMT, April natural gas is trading $1.752, down $0.084 or -4.63%.

Natural Gas Intelligence (NGI) said early Thursday that a large milder shift in one of the major weather models overnight is responsible for sending natural gas prices tumbling on Thursday.

NGI further reported that the European model underwent “big milder trends” overnight, shedding 17 heating degree days (HDD) compared to its Wednesday afternoon run and 27 HDD versus 24 hours prior, according to NatGasWeather.

The model showed “not nearly as much cold air into the northern U.S. March 5-8 by seeing a weather system over Southern Canada only providing a minor glancing blow,” the forecaster said. Based on the warmer shift overnight, “the natural gas markets are going to view weather patterns as being warm/bearish after the current cold shot sweeping across the northern and eastern U.S. exits Saturday.

U.S. Energy Information Administration Weekly Storage report

On Thursday, the EIA reported that domestic supplies of natural gas fell by 143 for the week-ending February 21. Total stocks now stand at 2,200 trillion cubic feet, up 637 billion cubic feet from a year ago, and 179 billion cubic feet above the five-year average, the government said.

Going into the report, traders were looking for a larger-than-average withdrawal for the week-ending February 21.

A Bloomberg survey predicted withdrawals ranging from 145 Bcf to 165 Bcf, with a median of 156 Bcf. Polls by the Wall Street Journal and Reuters produced similar results, while NGI’s model projected a pull of 152 Bcf.

The EIA recorded a 167 Bcf draw for the similar week last year, while the five-year average withdrawal stands at 122 Bcf.

Daily Forecast

Traders pressed prices lower following the EIA’s weekly storage report since it came in below the estimates. Furthermore, given the bearish shift in the forecast, it would’ve taken a huge draw to trigger any kind of a short-covering rally.

Natural Gas Price Prediction – Prices Slide Ahead of Inventory Report

Natural gas prices continued to consolidate on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for a reduction in stockpiles by 132 Bcf according to survey provider Estimize. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration. LNG exports have declined according to the latest data from the EIA. The spread of the coronavirus has reduced demand from China which has spilled over into US exports.

 

Technical Analysis

 

Natural gas slides 1.3% on Wednesday and are poised to test the February lows at 1.74. Resistance on natural gas is seen near the 10-day moving average at 1.87. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD histogram is printing in the black with a sliding trajectory which points to consolidation.  The relative strength index moved lower and reflects accelerating negative momentum. The current reading of the RSI is 41, which is in the middle of the neutral range and reflects consolidation.

US LNG Exports Slide as Demand Declines

US LNG exports decrease week over week. Fourteen LNG vessels with a combined LNG-carrying capacity of 49 Bcf departed the United States between February 13 and February 19, according to shipping data compiled the EIA.

Natural Gas Price Forecast – Natural Gas Markets Continue to Meander In Same Area

Natural gas markets have shown a bit of resiliency during the trading session on Wednesday, as the $1.80 level continues offer a bit of support. I believe that we are now trying to bounce around in a roughly $0.20 range, with the $2.00 level above should continue to offer plenty of resistance. Ultimately, believe that the market is trying to figure out what to do next, as we are at extraordinarily low levels. However, we are starting to head into the warmer months of the year in both Europe in the United States, and that is not going to do much for confidence when it comes to this market.

NATGAS Video 27.02.20

If we do break down below the lows, then I think we go looking towards the $1.60 level underneath, which is a historical low. If we can break above the $2.00 level, we would also be breaking above the 50 day EMA which of course is bullish, but I also see a significant amount of resistance near the $2.20 level. Ultimately, I am bearish this market, but I recognize we are more likely to see a bit of a continuation sideways more than anything else. The market participants continue to show quite a bit of back-and-forth, and I think this market is particularly prone to day trading more than anything else, but obviously you should keep a bit of a downward bias on anything you do. Buying this market, although possible, is obviously a very difficult to deal with. I do believe at this point in time that fading rallies is by far the easiest way to trade.

Natural Gas Price Fundamental Daily Forecast – Bullish Traders Hoping Cold Extends Beyond March 9

Natural gas futures are trading slightly higher on Wednesday after hitting their lowest level since February 12. The early price action suggests a slight change in the forecast to colder after yesterday’s reports showed little change.

A little of the short-covering could be related to speculation of higher demand next week beginning Tuesday through March 8, with a slightly stronger cool shot across the northern United States, according to NatGasWeather.

The forecaster also said, “There’s still potential for better pushes of subfreezing air into the northern United States around March 9-10, but far from convincing.”

At 12:57 GMT, April natural gas is trading $1.861, up $0.010 or +0.54%.

Short-Term Weather Outlook

According to NatGasWeather for February 26 to March 3, “A strong cold shot will push into the central US today with highs of 10s to 30s, then across the Southern Great Lakes, Ohio Valley and Northeast Thursday – Friday for a surge in national demand, aided by lows of 20s and 30s into the South and Southeast.”

“The West will be mostly mild as high pressure rules. Warm high pressure will expand to cover most of the U.S. early next week with widespread highs of 40s to 70s for a return to very light national demand.”

U.S. Energy Information Administration Weekly Storage Report

The EIA reported on February 20 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 April Natural Gas

Daily Forecast

Cold is coming, but it’s not expected to last. There will be a bump in demand, however, and cash prices are likely to be firm.

Most traders are pricing in a cold snap from March 3 to March 8. If it goes beyond March 9 then things could get interesting in the market. But at this time, forecasts calling for subfreezing temperatures after March 9 are “far from convincing,” NatGasWeather added.

The daily chart is still showing that $1.878 is the first level to overcome, followed by a series of retracement levels at $1.906, $1.924 and $1.947. The “wall of resistance” is likely to prevent any strong surges. However, price could spike higher if buyers are able to overcome $1.947 with conviction.

Natural Gas Price Prediction – Prices Consolidate Despite Warm Weather Forecast

Natural gas prices consolidated on Tuesday after tumbling Monday as concerns of the spread of the coronavirus continued to weigh on the energy complex. The lack of growth in China and the rest of Asia could reduce demand for LNG, which is a source of demand for the natural gas industry. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration.

Technical Analysis

 

Natural gas rebounded slightly climbing 0.8% after dropping nearly 4% on Monday. Prices are poised to retest the February lows at 1.74, as short-term momentum turns negative. Resistance on natural gas is seen near the 10-day moving average at 1.87. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD histogram is printing in the black with a sliding trajectory which points to consolidation.  The relative strength index moved lower and reflects accelerating negative momentum. The current reading of the RSI is 42, which is in the middle of the neutral range and reflects consolidation.

Demand Rises

Demand increased in the latest week driven by demand for space heating. Total US consumption of natural gas rose by 3% compared with the previous report week, according to data from the EIA. In the residential and commercial sectors, consumption increased by 7%. Natural gas consumed for power generation declined by 1% week over week. Industrial sector consumption increased by 1% week over week.

Natural Gas Price Forecast – Natural Gas Markets Quiet on Tuesday

Natural gas markets have shown signs of stabilization during the trading session on Tuesday, or perhaps just a general lack of interest. That is a good sign though considering that the markets have collapsed for so long, so stabilization is the closest thing that you can hope for right now to see whether or not the market can turn things around. I would not hold my breath for that though, because quite frankly the oversupply of natural gas will continue to be a very long term problem. Until we get a slew of bankruptcies in the United States as far as drilling and fracking is concerned, it’s difficult to imagine a scenario where natural gas can pick up from here. I believe that the $1.80 level continues offer support, but we have broken through there before. Given enough time, we could even go looking towards the $1.67 level underneath which is a historically important level.

NATGAS Video 26.02.20

To the upside, the $2.00 level offers a lot of resistance, as it is a large, round, psychologically significant figure. Furthermore, the 50 day EMA sits just above there, and therefore one would have to think that there is a lot of selling pressure just waiting for the market to try to reach and break above there. For that, even if we were to break above that level there should be plenty of resistance near the $2.20 level as well. This is a long term downtrend, and should continue to be a market that you should be selling.

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

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.

Natural Gas Price Prediction – Prices Drop as Exports are Expected to Decline

Natural gas prices tumbled on Monday as concerns of the spread of the coronavirus continued to weigh on the energy complex. The lack of growth in China and the rest of Asia could reduce demand for LNG, which is a source of demand for the natural gas industry. The weather is expected to be warmer than normal over the next 8-14 days according to the National Oceanic Atmospheric Administration. Managed money reduced short position in futures and options and added to long position according to the most recent commitment of trader’s report.

Technical Analysis

Natural gas prices dropped nearly 4% on Monday, reversing the gains seen last week. Prices are poised to retest the February lows at 1.74, as short-term momentum turns negative. Resistance on natural gas is seen near the 10-day moving average at 1.87. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD histogram is printing in the black with a sliding trajectory which points to consolidation.  The relative strength index moved lower and reflects accelerating negative momentum. The current reading of the RSI is 41, which is in the middle of the neutral range and reflects consolidation.

Hedge Funds Reduce Short Positions

According to the latest commitment of trader’s report released for the date ending February 18, 2020, managed money reduced short position in futures and options by 15.5K contracts while increasing long position in futures and options by 21K contracts. Despite the reduction in short open interest, hedge funds that are short natural gas outnumber hedge funds that are long futures and options by 2.6-times, down from nearly 3-times last week.

Natural Gas Price Forecast – Natural Gas Markets Drift Lower

Natural gas markets gapped lower to kick off the week as it looks like we are going to head back towards the $1.80 level. Short-term analysis suggests that there it could offer a bit of support, but I do think that it’s very possible that we break down below there. After all, the oversupply issue of natural gas continues to be a major problem, and therefore it’s likely that the trend should continue. I think that at this point in time the $2.00 level above is massive resistance, and it should be due to the fact that it is a large, round, psychologically significant figure.

NATGAS Video 25.02.20

At this point in time, the 50 day EMA is starting to reach towards the $2.00 level. That makes it even more resistive on any type of rally. Furthermore, if the market was to break above there think the $2.20 level is the next major resistance barrier also. As long as the market stays below the $2.20 level, I think that we have an opportunity to short it every time it rallies. Furthermore, the temperatures in the United States are about to start getting warmer, and therefore it’s very likely that the demand is going to drop even further. If we were to break down below the most recent low, then the market is very likely to reach towards the $1.60 level. At this point, we need to see a lot of bankruptcies in the United States as far as drillers and suppliers are concerned, and then at that point we might be able to start buying. Until then, this is a market that cannot be bought under any circumstance.

Natural Gas Price Fundamental Daily Forecast – Milder Temperatures after March 1 Capping Prices

Natural gas futures are trading lower on Monday shortly after the regular session opening after an uneventful weekend in the weather department. The latest forecasts are a little bearish, calling for late February cold to moderate into March.

Balances have tightened considerably in the past few months which may be enough to provide a floor for the market, but there just aren’t enough lingering cold spells to generate any sustainable rallies.

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.

Short-Term Weather Outlook

According to NatGasWeather for February 24 to March 1, several weather systems will impact the US the next few days, although quite mild over most regions with highs of 40s to 70s for light demand. Colder exceptions will be across the Northern Plains with highs of 20s to 30s.

One weather system will bring showers across the Southern Plains, while a second impacts the Northwest. Much colder conditions will sweep across the west-central US Wednesday through Thursday then over the eastern half of the US Friday through Sunday for a surge in national demand as lows of -0s to 20s become widespread, including 30s into the South and Southeast. Overall, light demand to start the week, then high for the second half of the week and next weekend.

Daily Forecast

The key level to watch today is $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.

Safe Haven and Tight Supply Commodities in Demand

In demand were the safe-haven metals of gold and silver as well as those with a tightening supply outlook such as cocoa, sugar and wheat. Funds continued to cut crude oil longs as the rally extended into a second week. A development that highlights the worries related to the demand shock caused by the virus outbreak in China.

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Broad price gains in the week to February 18 saw hedge funds turn net-buyers for the first time in four weeks. The sentiment was temporarily supported by actions from the People’s bank of China and the market mistakenly adopting the narrative of the virus outbreak primarily being a Q1 event. The underlying uncertainty remained and that was strengthened towards the end of last week on renewed fears as the virus intensified beyond China’s borders.

The canary in the coal mine was gold and silver which despite dollar strength and the attempted rally among pro-cyclical commodities saw continued strong buying. In our Commodity Weekly from Friday titled “Gold is in the midst of a perfect storm” we highlighted the reasons why precious metals continue to attract buyers.

The gold net-long jumped by 24%, the equivalent of nearly $9 billion nominal, to 284k lots while funds increased the silver long by 22% to 68k lots, a 30-month high. Gold’s accelerated rally to a seven-year high in the days following the reporting period is likely to have taken the net-long above the previous record of 292k lots. With total holdings in ETF’s backed by bullion also hitting record highs, the combined ETF and fund long reached a record of 112 million ounces last Tuesday.

Funds cut bullish WTI crude oil bets by 27k lots while keeping the Brent long close to unchanged. The latter potentially in response to supply risks from Libya, Russia’s Rosneft and potential OPEC+ cuts.. The Brent long at 283k lots remains some 80k lots above its October low.

The WTI crude oil long meanwhile dropped to 95k lots, just 9k above the October low. It’s long/short ratio has on a combination of long liquidation and fresh short selling dropped to 1.80, close to an area that has provided support on several occasions since 2015. Perhaps an early sign of support emerging.

The record natural gas short was cut by 13% in response to cooler U.S. weather temporarily off-setting the continued price weakness caused by the Asian demand shock and a mild winter across the Northern Hemisphere.

Agriculture commodities were mixed with those facing tightening supply receiving additional buying interest. The net-long in CBOT wheat jumped 41% to 65k lots, an 18-month high, the sugar long reached 166k lots, a three-year high. Despite having run of steam the cocoa long nevertheless reached a fresh six-year high while continued coffee selling drove the net-short to a 15-week high.

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday.
The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials, the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and others.

Our focus is primarily on the behavior of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Natural Gas Price Fundamental Weekly Forecast – Cold Weather Not Stable Enough to Sustain Rallies

Natural gas futures are trading lower early Monday after nothing significant in the weather department developed over the weekend. The price action is basically an extension of Thursday and Friday’s sell-off. According to the latest models, warmer trends are showing up in the latest forecasts. Not only are futures prices feeling downside pressure, but so are spot prices. On Friday, the Natural Gas Intelligence (NGI) Spot Gas National Average dropped 10.5 cents to $1.705.

Last week, April Natural Gas futures settled at $1.917, up $0.061 or +3.29%. Early Monday, futures are trading $1.879, down $0.038 or -1.98%.

NatGasWeather:  Too Many Mild Breaks to Sustain Rallies

NatGasWeather blamed the price weakness on weather-data that showed late-February cold moderating into March. The forecaster went on to say that the European model lost more than 15 heating degree days (HDD).

The Global Forecasting System (GFS) had already begun to warm in earlier runs but gained back 7 HDDs in Friday’s midday run, though the model is still down more than 30 HDDs from the start of the week, NatGasWeather said. Specifically, the model favors mild conditions returning across most of the United States March 3-6, besides the far northern part of the country.

“It certainly helps the balance has tightened considerably the past few months to provide a floor to prices, but sustained colder-than-normal patterns are required to fully take advantage,” the forecaster said. “Essentially, these bouts of colder air are helpful, but to be full-fledged bullish, there mustn’t be these mild breaks in between, and the weather data keeps disappointing by trending milder in time with longer breaks.”

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.

Weekly Forecast

The main trend is down according to the weekly swing chart. A trade through $1.788 will signal a resumption of the downtrend. The main trend will change to up on a move through $2.447. This is highly unlikely at this time.

The minor trend is also down. The nearest minor top is at $2.204, followed by another minor top at $2.196.

The minor range is $1.788 to $2.024. Its 50% level or pivot at $1.906 is controlling the near-term direction of the market.

A sustained move under $1.906 will indicate the selling pressure is getting stronger. Overtaking this level will signal the return of aggressive counter-trend buyers.

We could see periodic short-covering rallies over the near-term, but without a lingering cold front, any rallies are likely to be stopped by fresh short-sellers.

Natural Gas (NG) Futures Technical Analysis – Weakens Under $1.926, Strengthens Over $1.949

Natural gas futures retreated on Friday, but still managed to post a 3.29% gain for the week. Prices fell after the latest weather models indicated near-term warmer trends. Spot gas prices were also pressured as temperatures were set to warm over the weekend. Natural Gas Intelligence’s Spot Gas National Average dropped 10.5 cents to $1.705.

On Friday, April Natural Gas settled at $1.917, down 0.009 or -0.47%.

Prices ran up on Thursday after the U.S. Energy Information Administration (EIA) reported a larger-than-expected storage withdrawal, but declined as weather data showed late-February cold moderating into March, according to NatGasWeather.

Daily April Natural Gas

Daily Technical Analysis

The main trend is down according to the daily swing chart. Momentum shifted to the upside early last week, but then turned back down at the end of the week.

The main trend will change to up on a trade through $2.024. A move through $1.788 will signal a resumption of the downtrend.

The minor trend is down. It turned up on Monday, but then back down on Thursday, highlighting last week’s volatile price action.

The main range is $2.196 to $1.788. Its retracement zone at $1.992 to $2.040 stopped the rally at $2.024 on February 20.

The short-term range is $1.788 to $2.024. Its retracement zone at $1.906 to $1.878 stopped the selling on Friday at $1.874.

The minor range is $1.831 to $2.024. Its 50% level at $1.928 provided resistance on Friday.

A second minor range is $2.024 to $$1.874. Its 50% level $1.949 is additional resistance.

The market also filled in the gap on the daily chart at $1.872 to $1.919.

Daily Technical Forecast

Based on Friday’s price action and the close at $1.917, the direction of the April Natural Gas market on Monday is likely to be determined by trader reaction to the minor 50% level at $1.949 and the downtrending Gann angle at $1.926.

Bullish Scenario

A sustained move over $1.949 will indicate the presence of buyers. This will also put the market on the strong side of an uptrending Gann angle at $1.948. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the main 50% level at $1.992, followed by the main top at $2.024 and the main Fibonacci level at $2.040.

Bearish Scenario

A sustained move under the downtrending Gann angle at $1.296 will signal the presence of sellers. Potential support is layered at $1.906, $1.878 and $1.868.

The uptrending Gann angle at $1.868 is a potential trigger point for an acceleration to the downside with potential targets at $1.831, $1.828 and $1.808. The latter is the last potential support angle before the $1.788 main bottom.

Natural Gas Price Prediction – Prices Slip but Close up Nearly 4% for the Week

Natural gas prices whipsawed for a second consecutive trading session initially testing lower levels and then rebounding to close the session -0.6%. For the week, prices rallied nearly 4% but well of the highs of the week. This follows Thursday’s outside day reversal pattern is a negative sign. The weather is expected to be cooler than normal in the east and southeast for the next 6-10 day and then moderate to normal to above normal during the next 8-14 days. Supply that was available in the US was driven by imports from Canada

 

Technical Analysis

 

Natural gas prices whipsawed but rebounded from session lows after hitting support near the 10-day moving average at 1.87. Resistance is seen near the February highs at 2.03. Short term momentum is negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading on the fast stochastic is 57, coming from an overbought reading which reflects accelerating negative momentum.

Supply Increased Due to Imports

Supply rose as net imports from Canada rise. According to data from the EIA, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. The average net imports from Canada increased by 7% from last week with higher imports into New England because of winter temperatures.

Natural Gas Weekly Price Forecast – Natural Gas Markets Show Signs of Resistance

Natural gas markets have initially tried to rally a bit during the week but ran into a lot of resistance at the $2.00 level. Ultimately, the market rolling over the way it has to form a bit of a shooting star suggests that there are plenty of sellers out there. However, if we were to break above the top of the shooting star, then it’s likely that the $2.10 level above would also cause issues and most certainly the $2.20 level will. Keep in mind that the natural gas markets have been in a downtrend for some time and although we are at an extremely low level, the reality is that the market has no reason to rally for a significant amount of time.

NATGAS Video 24.02.20

Eventually, the slew of bankruptcies that will be coming in the United States for the natural gas industry will eventually lift price, but we are quite a way from there so keep in mind it may take some time for that to happen. I do believe that happens given enough time but it’s going to take quite a bit of effort and litigation to make that happen. I believe that rallies will be sold into time and time again, at least until we see some type of complete collapse of the industry. To the downside, I believe that the $1.60 level will be extraordinarily difficult to break down through, as it has been very supportive in the past. Ultimately, I believe that the market will try to reach that level sometime this year, and then start rallying based upon the bloodbath that I expect to see in the industry.