Natural gas futures are trading slightly higher at the mid-session on Wednesday after a gap-lower opening at the start of the week and mostly unchanged forecasts overnight. Despite the inside move chart pattern, which typically indicates investor indecision and impending volatility, the current bearish weather pattern is not causing investor indecision, but rather the price action is being fueled by oversold technical indicators.
At 17:25 GMT, March natural gas futures are trading $1.1897, up $0.008 or +0.48%.
Shortly before the opening on Wednesday, the latest 15-day outlook came in “marginally warmer,” according to Bespoke Weather Services. The pattern still showed a likelihood for “abundant warmth in the northern half of the nation, with the South generally held closer to normal.”
Short-Term Weather Outlook
Bespoke Weather Services data shows this month is on track to post the third warmest January, behind only 1990 and 2006.
“Models try to make the pattern a little more interesting around February 5-6, suggesting that a colder trough enters the Midwest/East,” Bespoke said. “While we should stop away from the El Nino-ish look some, thanks to falling global angular momentum, the high latitude configuration again does not look favorable for cold.” This raises the suspicion that “models are again more likely to be overdoing cold out in the longer range time frames.”
U.S. Energy Information Administration Weekly Storage Report
The lack of cold in the recent forecasts has taken a major toll on demand expectations over the past week. This has driven the near-term futures contract into its lowest level since early 2016.
Looking ahead to this week’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 97 Bcf withdrawal for the week ending January 17.
This article was originally posted on FX Empire
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