Natural Gas

Natural Gas Price Fundamental Daily Forecast – Low Demand, Increased Supply, Negative Prices Weigh on Market

Natural gas futures are inching lower on Friday as they move closer to their near-term objectives at $2.592 and $2.579. Some of the selling is a continuation of Thursday’s steep break which was fueled by a bearish government storage report and reports that natural gas prices fell to an all-time low negative level at the Waha Hub in the Texas panhandle.

At 07:47 GMT, May Natural Gas futures are trading $2.635, down $0.008 or -0.30%.

U.S. Energy Information Weekly Storage Report

On Thursday, the U.S. Energy Information Administration (EIA) reported that U.S. natural gas stockpiles increased by 23 billion cubic feet for the week-ending March 29. The consensus called for a build of 2 BCF although some guesses were as high as 10 Bcf. The five-year average for the week is a withdrawal of 28 billion cubic feet, and last year’s withdrawal totaled 29 billion cubic feet, according to the government data. Additionally, Total U.S. stockpiles now stand at 16.8% below last year’s level and 30.9% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.130 trillion cubic feet (Tcf) at the end of last week, around 505 billion cubic feet below the five-year average of 1.635 Tcf and 228 Bcf below last year’s total for the same period. Working gas in storage totaled 1.358 Tcf for the same period a year ago.

Negative Prices at Permian Basin

In an unusual development, gas producers have been paying customers to take gas since March 22, according to a report at Oilprice.com.

Due to constrained pipeline capacity out of the Permian Basin, and a glitch at a compression station on Kinder Morgan’s El Paso Gas pipeline, natural gas prices on Wednesday, fell to an all-time low negative level of -$3.38 per million BTUs at the WaHa Hub in the Texas panhandle.

Short-Term Weather Outlook

According to NatGasWeather for April 4 to April 10, “High pressure will cover much of the country through early next week with highs of 50s and 60s across the northern US, locally 70s. The southern US will be warm with highs of 70s and 80s, while slightly cooler exceptions will occur over the West and portions of the Tennessee Valley where weather systems will track through. Areas of showers and cooling will increase across the northern and central U.S. mid and late next week as weather systems sweep through. Overall, national demand will be low through early next week.”

Daily Forecast

The lethal combination of lower demand and rising production is expected to continue to exert downside pressure on natural gas until it reaches a value area. At this time that area is $2.592 to $2.579. However, some traders have pegged the psychological $2.500 level as the next support target.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.