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Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $2.878 Sets the Tone

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James Hyerczyk
·3 min read
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Natural gas futures are edging higher on Wednesday building on yesterday’s higher performance while completing a 50% retracement of the recent sell-off. The market is being supported by rising liquefied natural gas (LNG) exports, forecasts calling for higher mid-March demand and reports of lower production. Weaker cash market prices could be slowing the upside momentum.

At 12:40 GMT, April natural gas is trading $2.876, up $0.037 or +1.30%.

Strong LNG Demand

Natural Gas Intelligence (NGI) is reporting that LNG feed gas volumes hovered close to 10 Bcf Tuesday after exceeding that threshold earlier in the week.

LNG feed gas “demand reached a three-week high” of 10.5 Bcf/d at the start of this week, “as demand returned in the wake of the mid-February deep freeze,” EBW Analytics Group said.

There is plenty of room for growth, however, EBW added. At maximum levels, “total feed gas demand could surpass 12.25 Bcfd – representing a potential upside catalyst for natural gas later this year,” the firm noted Tuesday.

Short-Term Weather Forecast

According to NatGasWeather for March 2 to March 8, “A weather system with showers will sweep across Texas, South, and Southeast the next few days but still mild with highs of 50s and 70s. A colder system is exiting the Northeast with chilly morning lows of 10s to 30s. The rest of the US is mild with highs of 40s to 70s. After a mild break over the East mid-week, another cold shot with rain and snow will arrive Thursday through Saturday with chilly lows of 0s to 30s and highs of 20s to 40s for stronger demand, although countered by mild to warm conditions over much of the rest of the U.S. with highs of 40s to 70s.”

Steady Production

Production, meanwhile, hovered around 86 Bcf as trading go underway Tuesday, still well below the roughly 90 Bcf level reached prior to the paralyzing winter freeze that gripped Texas in mid-February, NGI reported.

Daily April Natural Gas
Daily April Natural Gas

Short-Term Outlook

Technically, the main trend is down. The short-term range is $3.060 to $2.697. Its 50% to 61.8% retracement zone at $2.878 to $2.921 is the primary upside target. This area is currently being tested. Trader reaction to this zone will determine the near-term direction of the market.

Since the trend is down, sellers could return in an effort to defend the trend. Aggressive buyers, on the other hand, could trigger to trigger a breakout over $2.921. Sellers are going to try to form a potentially bearish secondary lower top. Buyers are going to try to trigger a retest of the recent top at $3.060.

Looking ahead to Thursday’s Energy Information Administration (EIA) weekly storage report, early surveys indicate withdrawals ranging from 136 Bcf to 150 Bcf with a median of 148 Bcf.

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

This article was originally posted on FX Empire

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