Natural gas prices are attempting to comeback following a steep sell-off earlier in the session. The catalyst behind the selling pressure are demand losses in the latest guidance. Both the Global Forecast System (GFS) and European weather models lost demand overnight, particularly the “milder trending” European dataset, according to NatGasWeather.
Helping to stabilize prices are technically oversold prices and a bigger-than-expected weekly storage draw according to the U.S. government.
At 15:37 GMT, February natural gas is trading $2.223, down $0.061 or -2.58%. This is up from an earlier low of $2.167.
U.S. Energy Information Administration Weekly Storage Report
The EIA reported Friday that domestic supplies of natural gas fell by 161 billion cubic feet for the week-ending December 20. Analysts were looking for a drop of 150 to 153 bcf.
Total stocks now stand at 3.250 trillion cubic feet, up 518 bcf from a year ago. The five-year average stands at 3.319 bcf, down 69 bcf, according to the government report.
Short-Term Weather Outlook
“Weather trends were quite bearish overnight in the European model,” the forecaster said. “The GFS also lost demand but was still rather chilly January 6-8. But after the GFS has performed so poorly, we mentioned colder patterns were only to be believed if the European model was also on board, and now it isn’t.”
Technically, traders continue to straddle the short-term 50% to 61.8% retracement zone at $2.237 to $2.259. This zone is controlling the near-term direction of the market. Look for an upside bias to develop on a sustained move over $2.259, and for the downtrend to continue on a sustained move under $2.237.
This article was originally posted on FX Empire
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