Natural gas futures are edging lower on Friday after spiking to the upside the previous session. The price action suggests investors may have smoothed out the impact of yesterday’s lower-than-expected injection in the weekly government storage report.
Despite the early setback, the market remains underpinned by a combination of the bullish miss from the EIA and strong liquefied natural gas (LNG) export numbers. Short-term weather forecasts are coming in on the bearish side, but that’s no surprise considering that it’s still the shoulder season. Some traders are already pricing in a tight summer gas market, which is providing support for the deferred futures contracts.
At 14:19 GMT, June natural gas futures are trading $2.826, down 0.005 or 0.18%.
US Energy Information Administration Weekly Storage Report
The EIA reported on Thursday that domestic supplies of natural gas rose by 38 billion cubic feet (Bcf) for the week-ended April 16. That just about matched an average increase of 37 Bcf forecast by analysts polled by S&P Global Platts.
Total stocks now stand at 1.883 trillion cubic feet (Tcf), down 251 Bcf from a year ago but 12 Bcf above the five-year average, the government said.
Ahead of the EIA report, Natural Gas Intelligence (NGI) reported that a Bloomberg survey showed a median prediction of 47 Bcf based on 13 estimates ranging from 39 Bcf to 56 Bcf. Reuters polled 18 analysts, who came up with the same range of estimates but with a median increase of 49 Bcf. NGI’s model projected a 47 Bcf build.
Short-Term Weather Outlook
According to NatGasWeather for April 22 -28, “A strong late session cold shot continues to impact the eastern 2/3 of the country with rain, snow, and chilly lows of 20s to 40s for strong national demand, coldest over the Northern Plains/Midwest, and interior Northeast. The southern U.S. is also cooler than normal, although still comfortable with highs of 60s to 80s. The West will be warm with highs of 60s to 80s besides hotter 90s. Southwest before cooling this weekend as weather systems bring showers. The rest of the U.S. for next week will be comfortable with highs of 60s to 80s for light demand. Overall, high demand through Sunday – Monday, then becoming low.”
The main trend is up according to the daily swing chart. A trade through $2.860 will signal a resumption of the uptrend. A move through $2.735 will change the main trend to down.
The main range is $3.082 to $2.521. The market is currently testing its 50% to 61.8% retracement zone at $2.802 to $2.868. This zone is controlling the near-term direction of the June natural gas futures contract.
Look for the market to possibly accelerate to the upside on a breakout over $2.868 with $2.958 the next likely upside target.
A break back under $2.802 will indicate the return of sellers. This could lead to an eventual change in trend.
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