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Natural Gas Price Fundamental Weekly Forecast – Bullish Over $2.806, Bearish Under $2.762

James Hyerczyk

Natural gas futures finished nearly flat last week, highlighted by a sharp break on Thursday and an even greater rally on Friday. Fundamental traders are having a difficult time trying to forecast near-term demand because of the erratic weather pattern in the United States. The U.S. is currently showing heating demand in the Midwest and Northeast and cooling demand in parts of the Southeast and Southwest.

June Natural Gas futures settled the week at $2.767, up $0.003 or +-.11%.

S&P Global Platts reported last week that only for the fourth time since 2010, gas withdrawals on a national level were reported in April.

In other news, according to the U.S. Energy Information Administration, domestic supplies of natural gas fell by 36 billion cubic feet for the week-ending April 13. Traders had priced in a draw of about 23 Bcf.

The five-year average for the same week showed inventories climbed by 38 billion cubic feet. Total stocks now stand at 1.299 trillion cubic feet, down 808 billion cubic feet from a year ago, and 449 billion the five-year average, the government said.

Weekly June Natural Gas

Forecast

The volatile price action on Thursday and Friday can only mean one thing, traders aren’t sure how to play the extended winter and the delay of the start of the injection season which usually begins on April 1.

It may also be a sign that speculators are willing to come in on weakness and hedge selling is strong enough to stop any rallies. This type of price action is holding the market in a range.

We’re dealing with two ranges at this time. The first is formed by the week-ending December 22 bottom at $2.550 and the week-ending February 2 top at $2.975. Its 50% level or pivot is $2.762.

The second range is $2.975 to $2.638. Its 50% level or pivot is $2.806.

The key area to focus on this week is $2.762 to $2.806. This zone is controlling the direction of the market. A bullish tone could develop on a sustained move over $2.806 and a bearish tone on a sustained move under $2.762.

This week is expected to bring a mix of mild and cool periods as weather systems track across the country every few days, averaging out to near seasonal national demand. Overall, demand will be high through the weekend, then easing to moderate.

This article was originally posted on FX Empire

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