Natural Gas Price Prediction – Prices Rebound but Momentum has Turned Negative

 

Natural gas prices were nearly unchanged on Wednesday after testing lower levels early in the trading session. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal throughout the mid-west for the next 6-10 and 8-14 days. Supply fell in the latest week due to declines in dry natural gas production.

Technical Analysis

Natural gas prices rebounded from session lows and closing the session nearly unchanged. Resistance is seen near the 10-day moving average at 2.69. Support is seen near the December lows at 2.26. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated 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. Short-term omentum has also turned negative as the fast stochastic generated a crossover sell signal.

Supply Declined

Supply fell because of declines in dry natural gas production. According to data from the EIA, the average total supply of natural gas fell by 0.8% compared with the previous report week. Dry natural gas production decreased by 0.9% compared with the previous report week. Average net imports from Canada increased by 2.0% from last week.

Natural Gas Price Forecast – Natural Gas Continues to Get Pummeled

Natural gas markets sold off significantly during the trading session on Wednesday to break down below the 200 day EMA. That being said though, I think that it is only a matter of time before we bounced a little bit in order to sell off yet again. Given enough time, I think that the market will probably go looking towards the $2.40 level, possibly even lower than that. After all, as the temperatures warm up in the United States, that will drive down the price of natural gas as the demand also drops.

NATGAS Video 21.01.21

To the upside, the $2.80 level offers a significant amount of resistance and I think now offers the “ceiling in the market” that we are waiting to see. Ultimately, I think that this is a market that cannot be bought under pretty much any circumstance, due to the fact that the demand of the United States will continue to drop, not only due to warmer temperatures but the fact that the economy is going to be slowing down. Stimulus does not matter, because quite frankly it did not matter before the pandemic.

Yes, there may be a sudden surge economically, but the fact that natural gas is typically used as a heating commodity does not bode well for the upcoming several months. As long as that is the case, I think that you continue to short signs of exhaustion after small bounces. All things being equal, this is a market that I have no interest in buying, at least not until we start talking about trading winter contracts again.

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

Natural Gas Price Fundamental Daily Forecast – Bulls May Be Close to Throwing in the Towel on Winter Cold

Natural gas futures are trading lower at the midsession on Wednesday as hopes for an extreme cold snap fade with every new weather forecast calling for milder trends over the near-term.

The early pressure was fueled by the European model, which trended milder, putting it about 10-12 heating degree days warmer compared to previous runs over the past 24 hours, NatGasWeather said on Wednesday.

At 14:54 GMT, March natural gas futures are trading $2.477, down $0.052 or -2.06%.

NatGasWeather also said the American model added demand overnight, “but the European had been colder, and the natural gas markets were likely hoping the frostier scenario would come through,” the firm said. “Not to be the case, as the weather data disappoints yet again, as it’s done in almost all instances the past two winters.”

There’s still a “decent” amount of national demand expected starting this weekend through January 29, NatGasWeather said.

“However, the natural gas markets were clearly hoping for frigid air over Western Canada to push more aggressively across the Midwest and Northeast instead of only modest cold shots arriving,” according to the firm. “Also at issue, the pattern is now quite bearish for February 1-3 as warm upper high pressure builds over most of the U.S. besides the West Coast and far East for light national demand.”

Short-Term Weather Outlook

According to NatGasWeather for January 20 to January 26, “A cold shot will track across the Great Lakes and interior Northeast today with chilly highs of 20s & 30s. Most of the rest of the U.S. will be mild with highs of 40s to 60s for light national demand. Colder weather systems will push into the West and Northern Plains with rain and snow late this week with lows of -10s to 30s, then spreading across the rest of the northern U.S. this weekend for a swing to strong national demand.”

Daily March Natural Gas

Short-Term Outlook

Thursday’s U.S. Energy Information Administration (EIA) Weekly Storage report is likely to be a non-event because the data represents conditions for the week-ending January 15 and traders are focusing on next week’s heating demand and the possibility of bearish weather for February 1 – 3.

There’s still a shot at some decent demand next week, but it’s only supposed to be a spike lower in temperatures rather than a lingering cold spell. That’s not enough to wake up the bull.

The daily chart pattern suggests the bearish tone is likely to continue on a sustained move under $2.485, but we could see a short-covering surge if buyers can recover $2.552 with conviction.

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

Natural Gas Price Prediction – Price Drop as Cold Weather Fails to Materialize

Natural gas prices broke down on Tuesday, as the cold weather that was expected to move into the U.S. failed to come about. While the weather is expected to be cooler than normal across the west coast over the next 6-10 days, its expected to turn warmer than normal across most of the mid-west during the next 8-14 days. The EIA estimates that natural gas consumption was down 2.5% year over year in 2020.

Technical Analysis

Natural gas prices broke down on Tuesday, declining 7%. Prices broke through and upward sloping trend line. Target support on the February contract is seen near the December lows at 2.26. Resistance is seen near the 10-day moving average at 2.70. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is poised to turn negative as the MACD is expected to create a crossover sell signal.

Consumption was Down in 2020

The EIA estimates that U.S. natural gas consumption averaged 83.1 billion cubic feet per day in 2020, down 2.5% from 2019. EIA expects that natural gas consumption will decline by 2.8% in 2021 and by 2.1% in 2022. Most of the decline in natural gas consumption is the result of less natural gas use in the power sector, which EIA forecasts to decline because of rising natural gas prices. These declines are partly offset by rising natural gas use in other sectors.

Natural Gas Price Forecast – Natural Gas Markets Plunge

Natural gas markets gapped lower to kick off the trading session on Tuesday and then just kept on going to the downside. At this point in time, the market looks very negative, but we did fill a bit of a gap so that could cause short-term support. All things being equal, the market is going to continue to be very noisy, but of course it is moving mainly on the idea of warmer weather coming more than anything else. The 200 day EMA underneath is an area that could cause a little bit of support near the $2.48 level, and that of course the $2.40 level. All things being equal, this is a market that I think does go lower, as demand simply should fall through the floor.

NATGAS Video 20.01.21

In the meantime, I like the idea of fading short-term rallies, and it now looks as if the “ceiling in the market” has drifted down towards the $2.80 level. To the downside, we could go as low as $2.00, but that is probably going to take some time. After all, there will probably be a short-term cold snap or two ahead before we get into the springtime in America, but we are already trading the February contract, and more than likely will continue to see more bearish pressure the further out you go in the year.

The market will continue to be very choppy to say the least, but this simply means that you need to keep your position size somewhat reasonable. I think that given enough time the market will continue to rollover, because of the major amount of oversupply that is still out there, despite the fact that we have just gone through winter.

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

Natural Gas Price Fundamental Daily Forecast – Chance of Rising Polar Vortex Heating Demand Appears to Fading

Natural gas prices are trading sharply lower from Friday’s close suggesting bullish speculators have taken out the forecast for the polar vortex later in the month.

At the end of last week, meteorologists were anticipating a polar vortex – a cold snap that develops in the atmosphere above the North Pole and sends harsh blasts of freezing temperatures throughout the Northern Hemisphere. Should this develop, it could drop temperatures in Europe and Asia, as well, adding to already strong demand for U.S. liquefied natural gas (LNG).

The early price action on Tuesday suggests this isn’t likely to occur based on weekend data. Otherwise, bearish traders would be handing bullish speculators a huge gift.

Although we may not see the extremely cold temperatures that would likely drive heating demand sharply higher, the price action seems to be indicating there will be enough cold to provide support.

At 10:39 GMT, March natural gas futures are trading $2.624, down $0.72 or -2.67%.

Short-Term Weather Outlook

According to NatGasWeather for January 19 – January 25, “A cold shot will track across the Great Lakes and interior Northeast the next few days with chilly highs of 20s & 30s. Most of the rest of the U.S. will be mild with highs of 40s to 60s for light national demand. Colder weather systems will push into the West and Northern Plains last this week with lows of -10s to 30s, then spreading across the rest of the northern U.S. this weekend for a swing to strong national demand.”

US Energy Information Administration Weekly Storage Report

The EIA reported last Thursday a withdrawal of 134 Bcf from natural gas storage for the week-ended January 8. The report was bullish because the withdrawal exceeded pre-report estimates of 129 Bcf, but traders showed a muted reaction to the number because it came in well below the five-year average withdrawal for that time period of 161 Bcf.

Daily March Natural Gas

Daily Forecast

Ahead of the weekend, NatGasWeather said Friday, “We view the January 26 -29 period as one of the best chances this winter for cold to finally come through.” However, the early price action on Tuesday doesn’t show much confidence in the forecast.

Although traders may be trying to build a support base over a short-term support area at $2.552 to $2.485, the market seems to lack that important catalyst that could trigger a surge to the upside. Maybe we’ll get it during the release of the midday forecasts.

Technically, the main trend is up according to the daily chart, but last week’s change in trend is starting to look more like it was fueled by buy stops rather than aggressive buying.

On the downside, support comes in at $2.552 to $2.485. Fundamentally, strong demand for liquefied natural gas (LNG) and seasonal buyers betting on a cold weather spike are helping to underpin prices.

On the upside, the major resistance zone is $2.794 to $2.918. This area stopped the buying at $2.835 on January 12.

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

Natural Gas Price Forecast – Natural Gas Markets Drift Lower

Natural gas markets have gapped lower to kick off the trading week on Monday, breaking down below the $2.60 level initially. All things being equal, I think that the market will continue to have sellers jumping into the market and pushing natural gas lower due to the fact that demand will almost certainly be dropping as temperatures will rise over the course of the next few months, thereby eliminating a certain amount of demand.

NATGAS Video 19.01.21

The 200 day EMA underneath is at the $2.48 level, and underneath there you have the $2.40 level as support as well. At this point in time, I think that the market still as one you want to be fading any signs of strength, especially near the $2.80 level. Above there, the $3.00 level would be even more resistive as it is a large, round, psychologically significant figure and of course an area that has a small gap at it. I have no interest in trying to go long of this market, and quite frankly do not even have a scenario where we would be breaking above the $3.00 level.

As we head into the spring months, people will be looking at the natural gas oversupply as a major issue going forward, as has been the case for quite some time. Ultimately, this is a market that will find plenty of reasons to go lower, if for no other reason than lack of demand but the oversupply of natural gas is a structural one that should continue to cause major issues. The market breaking down below the $2.25 level would kick off a move towards the $2.00 level, which is what I think the longer-term target will be.

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

Natural Gas Price Fundamental Weekly Forecast – Will Bulls Betting on Late January Polar Vortex Be Disappointed?

Natural Gas futures closed higher last week, helped by a recovery in prices on Friday as traders reacted to mid-session weather reports calling for regional blasts of cold in key demand areas late in the month. The news was enough to scare some of the weaker shorts out of the market but forecasts calling for generally comfortable conditions across most regions of the Lower 48 during the third week of January helped to cap gains.

Last week, March natural gas futures settled at $2.696, up $0.040 or +1.51%.

US Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas declined by 134 billion cubic feet for the week-ended January 8. On average, the data were expected to show a drop of 123 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.196 trillion cubic feet, up 126 billion cubic feet from a year ago, and 218 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for January 15-21, “A weather system with rain and snow will extend from the Great Lakes to the Southeast the next few days with highs of 30s to 50s for a minor bump in demand, although countered by mild conditions over the rest of the U.S. with highs of 40s to 70s. Frigid air with lows of -10s to 20s will arrive across the Rockies and Northern Plains next week, although more than countered by warm versus normal highs of 40s to 70s over the South and East.”

Weekly Forecast

Prices could trade rangebound this week because of generally comfortable weather conditions across most regions of the Lower 48. This could cap gains while strong demand for liquefied natural gas (LNG) provides the support.

Traders will be keeping an eye on the ever changing outlooks for the last week in January. According to Natural Gas Intelligence (NGI), the final week of January holds promise for intense cold settling in over the Northwest and Plains before moving east. This could result in several days of freezing temperatures over large swaths of the country.

“We view the January 26-29 period as one of the best chances this winter for cold to finally come through,” NatGasWeather said Friday.

If the prediction for a polar vortex – a cold snap that develops in the atmosphere above the North Pole and sends harsh blasts of freezing temperatures throughout the Northern Hemisphere – holds true then look for upward pressure on domestic gas prices.

If there is no polar blast of cold air then prices will retreat. However, I don’t see a test of the recent lows unless there is a significant drop in demand for LNG.

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

Natural Gas Price Fundamental Daily Forecast – ‘Just Enough Cold’ Late January Fuels Short-Covering Rally

Natural gas futures closed higher on Friday after recovering from an early session loss. The market opened under pressure as overnight forecasts pointed toward a short-term warming trend, but prices turned up at the mid-session as volatile midday outlooks shifted back to expectations for a severe winter chill in late January that could trigger a surge in heating demand.

On Friday, March natural gas futures settled at $2.696, up $0.066 or +2.51%. The strong gains more than offset losses from the previous session that were fueled by forecasts calling for warmer temperatures.

Midday Weather Forecasts Reverse Early Session Weakness

“We finally see a colder pattern arrive here as we head into late month” focused on central and western portions of the lower 48, “but with some cold bleeding eastward” under a North Atlantic Oscillation block in the Atlantic, Bespoke Weather Services said.

“Because the strongest cold looks to focus back from the Plains to the Pacific Northwest, it’s not an extreme pattern to the cold side in terms of national demand, but it’s easily the coldest we have seen all season long,” the firm added. “We continue to believe this can give us a couple of colder weeks before potentially moderating after the first week or so of February.”

Cash Prices Advance

Natural Gas Intelligence (NGI) reported that spot gas prices advanced Friday after a bout of harsh winter weather in the upper reaches of the central United States.

“Blizzard conditions blanketed much of the Upper Midwest late Thursday and into Friday, and forecasters said the weather system, bringing both rain and snow, was expected to extend from the Great Lakes to portions of the East over the weekend,” NGI wrote.

“Prices in the Northeast surged Friday and led the overall gains. Algonquin Citygate spiked $2.185 day/day to average $5.205 and PNGTS jumped 79.5 cents to $4.990,” according to NGI.

‘Price gains generally were much more modest in other regions. In the Rocky Mountains, CIG picked up 5.5 cents to $2.635, while in Appalachia, Columbia Gas climbed 5.0 cents to $2.580. Out West, there were a few hubs that lost ground. SoCal Citygate shed 12.5 cents to $3.260, while El Paso S. Mainline/N. Baja dropped 6.0 cents to $2.830,” NGI reported.

Daily March Natural Gas

Short-Term Outlook

Friday’s overall gains aside, looking ahead to the third week of January, temperatures were expected to be above normal outside of the northern Plains and interior West, NatGasWeather said on Friday. “With high pressure ruling most of the rest of the United States,” national heating degree days “will be much lighter than normal.”

NatGasWeather experts went on to say that gas prices may have to wait until late January and the anticipated widespread surge in cold to generate and sustain upward momentum.

Technically, the key support zone is $2.552 to $2.485. The major resistance zone is $2.794 to $2.918. The upper or Fibonacci level is a potential trigger point for an acceleration to the upside. Overcoming this level is not an automatic buy, traders still have to watch the price action and read the order flow if this level is taken out. If the volume isn’t there to support the move then overly aggressive longs could get caught in a bull trap.

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

Natural Gas Price Prediction – Prices Rise on Colder Weather Forecast

 

Natural gas prices moved higher on Friday, recovering Thursday’s losses following a larger than expected draw in natural gas inventories. The weather is expected to become colder than normal throughout the United States’ northern portion, potentially bringing a ridge trough pattern that would bring cold weather. Natuaral gas production is expected to fall 2% in 2021 according to the latest Short-term energy outlook from the EIA.

Technical analysis

Natural gas prices moved higher  on Friday, recovering back through the 10-day moving average near 2.71. The resistance is seen near the 50-day moving average at 2.74. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal.. Medium-term positive momentum is decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

U.S. Prodution will Decline in 2021

EIA estimates that the annual U.S. gas production for 2021 will fall 2% and average 96.2 billion cubic feet per day. However, in 2022, EIA estimates that natural gas production will rise by 2% compared with year-ending 2021 production of 98.2 Bcf per day, accompanied by rising natural gas prices. The United States set annual natural gas production records in 2018 and 2019, largely based on increased drilling in shale and tight oil formations. This increased production led to higher volumes of natural gas in storage and decreased natural gas prices. In 2020, the supply and demand contraction resulting from the COVID-19 pandemic resulted in marketed natural gas production decreasing by 2% from 2019 levels.

Natural Gas Price Forecast – Natural Gas Pulls Back From Same Level

Natural gas markets initially rallied during the trading session on Friday only to turn around and show signs of exhaustion near the $2.80 level. At this point, the market is sitting at the 50 day EMA, and therefore it is likely to pay close attention to this area. That being said though, the market is likely to continue going lower based upon the fact that this is the wrong time of year for buyers to be looking to get into natural gas, because quite frankly the demand will start dropping.

NATGAS Video 18.01.21

When you look at this chart, it is easy to see that there is a significant amount of resistance above extending from the $2.80 level to the $3.00 level. Ultimately, I think that rallies that show signs of exhaustion will continue to be sold into, as the market has struggled to continue to go forward. I think ultimately the market is likely to go down to the 200 day EMA which is near the $2.48 level. After that, the market then could go down to the $2.40 level. All things being equal, I like the idea of fading any short-term signs of strength, because given enough time I think the market will probably look towards the $2.00 level underneath, based upon longer-term charts.

After all, we have more than enough natural gas out there and therefore it is going to be difficult to get through the massive amounts of supply, so I think this continues to be a longer-term bearish market going forward. I have no interest in buying this market, because quite frankly I cannot even come up with the wish that area.

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

Natural Gas Weekly Price Forecast – Continue to Find Sellers Above

Natural gas markets have tried to rally a bit during the course of the week but gave back the gains near the $2.80 level. We have not quite formed a shooting star, but it certainly suggests something similar. Ultimately, we are getting close to the warmer time of year that will cause demand for natural gas to plummet overall. That being said though, the market will continue to look at the possibility of stimulus pushing demand higher, but at this point in time there is so much out there in the way of supply that it is difficult to imagine that natural gas will simply take off to the upside for a bigger move. All things being equal, this is a market that I think will offer selling opportunities given enough time.

NATGAS Video 18.01.21

As we roll into the spring, the market is likely to go looking towards the $2.25 level, possibly the $2.00 level underneath. That is an area that previously had been resistance, so it should be supported, not only do to that, but the fact that it is a large, round, psychologically significant figure. Furthermore, we have the 200 and the 50 week EMA indicators slicing through this general vicinity that we are at right now, so I think that causes a little bit of technical noise to begin with.

I have no interest in buying natural gas, at least not this time a year as we are in the wrong part of the year to expect massive amounts of demand. After all, we are already trading the February contract, and it is only a couple of weeks before we roll over to the March contract.

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

Natural Gas Price Fundamental Daily Forecast – Weather Outlook as Well as Reaction to $2.698 Sets the Tone

Natural gas futures are trading higher after reversing earlier losses on Friday. The price action suggests bullish investors are still placing bets on extremely cold temperatures at the end of the month despite weather patterns shifting to the milder side. Support is also being provided by yesterday’s bullish government storage report and rising U.S. liquefied natural gas (LNG) volumes.

At 13:16 GMT, March natural gas futures are trading $2.702, up $0.072 or +2.74%.

US Energy Information Administration Weekly Storage Report

The EIA on Thursday reported a withdrawal of 134 Bcf from natural gas storage for the week-ended January 8. The report was bullish because the withdrawal exceeded pre-report estimates of 129 Bcf.

Ahead of the report, Natural Gas Intelligence (NGI) said a Bloomberg survey found estimates ranging from withdrawals of 120 Bcf to 141 Bcf, with a median of a 129 Bcf decrease. NGI modeled 130 Bcf withdrawal for this week’s report, which covers the week-ending January 8. Energy Aspects predicts a 128 Bcf withdrawal.

A year ago, the EIA recorded a 91 Bcf withdrawal for the comparable year-ago period, while the five-year average withdrawal is 161 Bcf, according to the agency.

Short-Term Weather Outlook

According to NatGasWeather for January 14-20, “Most of the U.S. will be mild and dry the next few days with highs of 30s to 50s across the northern U.S. and 50s to 70s across the southern U.S. for light national demand.

A weather system will extend from the Great Lakes to the Southeast late this week and this weekend for a minor bump in demand, although countered by mild conditions over the rest of the U.S. Frigid air with lows of -10s to 20s will arrive across the Rockies and Northern Plains next week, although warmer versus normal over the South and East with highs of 40s to 70s for light demand.”

Daily Forecast

We expect natural gas to continue to be supported by strong LNG demand, but I don’t think we’ll see a breakout to the upside unless the weather models start to show frigid temperatures in late January.

Expectations of this continue to be mixed however. “The latest GFS still shows cold air eventually reaching the Great Lakes and Northeast January 25-28, but we think this period is also subject to warmer trends in time,” NatGasWeather said.

Technically, trader reaction to $2.698 will determine the short-term direction of the market. A move over $2.698 could drive prices into $2.794 to $2.835. A move under $2.698 will target $2.552 to $2.485.

The longer-term direction of natural gas will be determined by trader reaction to $2.794 to $2.918. The latter is a potential trigger point for an acceleration to the upside.

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

Natural Gas Price Prediction – Prices Slide Despite Inventory Draw

Natural gas prices moved lower on Thursday despite a larger than expected draw in natural gas stockpiles. The weather is expected to be cooler than average on the western half of the U.S. and normal to warmer than average on the east coast of the United States. President-Elect Biden is expected to give a speech in the evening in the United States that will outline his stimulus plan. This could be an impetus to help prices gain traction.

Technical analysis

Natural gas prices moved lower on Thursday, breaking through support near trend line resistance that coincides with the 10-day moving average near 2.68. Target support on natural gas is seen near the January lows at 2.60. The resistance which is former support is the 10-day moving average and then the 50-day moving average at 2.74. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 63, down from 70, which reflects accelerating negative momentum. Medium-term positive momentum is decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

natural gas

 

Inventories Declined More than Expected

Natural gas in storage was 3,196 Bcf as of Friday, January 8, 2021, according to the EIA. This represents a net decrease of 134 Bcf from the previous week. Expectation were for a 131 Bcf draw according to survey provider Estimize. Stocks were 126 Bcf higher than last year at this time and 218 Bcf above the five-year average of 2,978 Bcf. At 3,196 Bcf, total working gas is within the five-year historical range.

Natural Gas Price Forecast – Natural Gas Markets Look Tired

Natural gas markets have gapped just a bit higher during the trading session on Thursday but turned around to show signs of exhaustion and weakness before it was all said and done. Quite frankly, this is a market that is probably running on borrowed time due to the fact that we are getting rather close to the idea of warmer temperatures in the United States and the northern hemisphere in general, so that obviously could be an issue when it comes to demand. Ultimately, the 50 day EMA is sitting in the same area, and that could cause a certain amount of interest in the market on both sides, but if we break down below it then that would be a sell signal for certain traders.

NATGAS Video 15.01.21

Ultimately, I think there is a lot of resistance between the $2.80 and the $3.00 level. I am looking to sell any attempt to break out and especially ones that are followed by another exhaustive candle. It is obvious to me that there is a lot of selling pressure above, and with the warmer temperatures coming sooner rather than later, that is a killer when it comes to natural gas markets. We are in the midst of the February contract, and will be trading the March contract before you know it. Once you start talking about March contracts, then you start to talk about a major drop in demand. I have no interest in buying natural gas, it is far too late in the year at this point to be interested.

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

Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show 129 Billion Draw

Natural gas futures are trading nearly flat on Thursday as investors await the latest storage report from the government at 15:30 GMT and the midday forecasts that should offer more insight into the strength of the so-called “Polar Vortex” that could reach key U.S. demand areas later in the month.

Capping gains are uncertainty over whether the extremely cold temperatures will even reach the United States. Helping to underpin prices are calls for strong liquefied natural gas (LNG) due to robust demand from Europe and Asia.

At 14:21 GMT, March natural gas futures are trading $2.694, up $0.005 or +0.19%.

Near-Term Weather Outlook

NatGasWeather observed mixed trends in the overnight data, with heating demand gains in the Global Forecast System countered by demand losses in the European data.

“Overall, both maintained a rather bearish pattern through January 21 with only modest cold shots into the U.S.,” the firm said. “However, both were rather chilly across the northern U.S. January 23-28, but this time the GFS more so than the European.”

“The overnight European does show that if frigid air over Canada and the western U.S. January 23-28 were to shift just slightly further westward, the pattern would trend rapidly warmer over the important Midwest and eastern U.S., NatGasWeather said. “As such, it’s critical cold comes through” for this period, “but to our view, the risk is there could be warmer trends in time.”

US Energy Information Administration Weekly Storage Report

According to Natural Gas Intelligence (NGI), “Traders and analysts are predicting another triple-digit withdrawal from U.S. natural gas stocks in the latest EIA storage report, scheduled for 15:30 GMT.”

Ahead of the report, a Bloomberg survey found estimates ranging from withdrawals of 120 Bcf to 141 Bcf, with a median of a 129 Bcf decrease. NGI modeled 130 Bcf withdrawal for this week’s report, which covers the week-ending January 8. Energy Aspects predicts a 128 Bcf withdrawal.

A year ago, the EIA recorded a 91 Bcf withdrawal for the comparable year-ago period, while the five-year average withdrawal is 161 Bcf, according to the agency.

Daily March Natural Gas

Daily Forecast

Unless there is a blowout miss in the EIA report, most traders will be focusing on the midday weather forecasts and particularly the outlook for January 23-28.

Technically, trader reaction to $2.698 will determine the short-term direction of the market. A move over $2.698 could drive prices into $2.794 to $2.835. A move under $2.698 will target $2.552 to $2.485.

The longer-term direction of natural gas will be determined by trader reaction to $2.794 to $2.918. The latter is a potential trigger point for an acceleration to the upside.

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

Natural Gas Price Fundamental Daily Forecast – Disappointing Polar Vortex Cold Capping Gains

Natural gas futures are edging lower late Wednesday despite forecasts calling for a polar vortex, or subfreezing air descending from Canada and covering most of the continental United States in late January.

The price action suggests traders are approaching the possible onset of the extremely cold temperatures at the end of the month cautiously. Meanwhile, expectations of increased demand for U.S. liquefied natural gas (LNG) in Europe and Asia are expected to underpin the market.

At 19:37 GMT, March natural gas futures are trading $2.703, down 0.004 or -0.15%.

Hope for Intense Polar Vortex May Be Fading

Both the American and European weather models are calling for a heavy dose of cold by late last week, but the pattern is not expected to be as strong as the polar vortex that hit the U.S. in 2014. This may be dampening demand expectations.

NatGasWeather said prices were boosted early by the “hype of cold now for January 23-26.” Major models in the afternoon, however, showed “not quite as cold air into Western Canada, thereby pushing less impressive subfreezing air into the U.S. as well in late January… “Of course, the data could flip back colder overnight and will be watched very closely by market participants.”

Asia, Europe LNG Demand Expected to Surge

It may not get as cold as initially expected in the U.S. when the polar vortex arrives, but Asia and Europe are expected to experience freezing conditions that should drive up heating fuel needs.

Although LNG volumes fell below 10 Bcf on Tuesday for the first time this year, LNG data showed, this was blamed on temporary delivery interruptions. However, export demand is expected to climb back above 11 Bcf this winter, a level at which it straddled for several days last week, according to Natural Gas Intelligence (NGI).

Daily March Natural Gas

Short-Term Outlook

March natural gas futures are going to have a hard time rallying over the short-run if the expected cold isn’t powerful enough to drive prices over the top of a key resistance zone at $2.918. This price is a potential trigger point for an acceleration to the upside. A short-covering rally won’t cut it. Real buyers have to have a reason to show up. Meanwhile, the market is likely to continue to find resistance at $2.794.

There is support, however, both technical and fundamental. Technically, minor support is $2.698, but the main support is $2.552 to $2.485. Fundamentally, strong LNG demand could prevent a wash-out to the downside.

Side Notes

With gains capped by a weak Polar Vortex and strong LNG demand expected to underpin prices, we could be looking at a rangebound trade over the near-term with support coming in at $2.552 and resistance $2.794.

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Natural Gas Price Prediction – Prices Slip Ahead of Inventory Numbers

Natural gas prices moved lower on Wednesday ahead of the Energy Department report on inventories.  Warmer than average weather forecast to cover most of the U.S. over the next two weeks. On Thursday, the Energy Department will release its inventory report. Expectations are for a 131 Bcf draw in stockpiles according to survey provider Estimize. U.S. exports rose to a new record in December

Technical Analysis

Natural gas prices moved lower on Wednesday, consolidating the recent gains.  Prices moved back below support, which is now resistance near the 50-day moving average at 2.77. Target resistance is seen near the late November highs near 2.98. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory, which points to higher prices. The RSI turned over, reflecting consolidation.

Exports Rise to Record Highs

U.S. exports of liquefied natural gas set a new record in December after a record-breaking November 2020, averaging 9.8 billion cubic feet per day. In December, U.S. LNG exports were more than three times higher than the reduced export levels in the summer of 2020.

Natural Gas Price Forecast – Natural Gas Running Into Headwinds

Natural gas markets have initially tried to rally during the trading session on Wednesday but gave back the gains near the $2.80 level. At this point, it looks like the market is ready to enter back into the consolidation area that we have been in previously, reaching down towards the gap underneath. The 200 day EMA sits at the $2.48 level, so I think that could be where we go, if we do pick up a little bit more in the way of negativity, and of course if weather starts to turn warmer. After all, this market tends to move based upon the most recent weather reports coming out of the northeastern part of the United States.

NATGAS Video 14.01.21

Looking at the overall attitude of the market, we have been falling for a while, and it does suggest that we are going to look for selling opportunities due to the fact that the warmer temperatures are coming, and of course it is going to drive down demand overall. That being said, I think the market probably would take off to the $3.00 level if we can break above the shooting star from the Tuesday session, because it would show a significant amount of momentum and strength of course.

That being the case, the market is likely to pick up a bit of interest. That being said, the $3.00 level above is a gap that should cause significant resistance as well. Either way, I have no interest in buying natural gas, it is far too late in the year to start buying into a bullish case scenario. After all, demand will drop in the next few months.

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

Natural Gas Price Prediction – Prices Rise Despite Warm Weather Ahead of Inventory Report

 

Natural gas prices moved higher on Tuesday despite a normal to warmer than normal weather forecast that will not likely help demand. Prices appear to be moving higher in sympathy with oil prices. On Thursday, the Energy Department will release its inventory report. Expectations are for a 131 Bcf draw in stockpiles according to survey provider Estimize. U.S. LNG exports declined week over week.

Technical Analysis

Natural gas prices moved higher on Tuesday but closed off the highs of the trading session. Prices recapture resistance, which is now support near the 50-day moving average at 2.77. Resistance is seen near the late November highs near 2.98. Medium-term momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI also broke out hitting the highest level since October which reflects accelerating positive momentum.

LNG Exports Decline

U.S. LNG exports decrease week over week. According to the EIA, Twenty one LNG vessels with a combined LNG-carrying capacity of 77 Bcf departed the United States between December 31, 2020 and January 6, 2021.