Natural Gas Price Fundamental Daily Forecast – Rebuild of Storage Laying Groundwork for Bearish Year
After a promising opening to the new year, natural gas prices fell yesterday after new forecasts called for mild temperatures for the first half of January.
On Wednesday, March natural gas settled at $2.829, down $0.022 or -0.78%.
Traders ignored the new forecast from NatGasWeather which called for a cold front to sweep across the Great Lakes and Northeast, choosing instead to focus on reports of above normal temperatures that were expected to “quickly spread back across a majority of the country” Friday and into the weekend.
Natural gas is inching higher on Thursday after hitting lows not seen since September. The move is likely being fueled by short-covering and position-squaring in response to technically oversold conditions.
Forecast
NatGasWeather updated its short-term forecast covering January 3 to January 10. “A cool front will keep the Great Lakes and Northeast cool into Friday with lows of teens and 20s. A stronger cold shot covers the West and Plains with lows of -0s to teens, including 20s again into North Texas where snowfall is falling on the back side of weather systems where heavy rains are falling into the warmer air over the South. Above normal temperatures will quickly return across much of the US Friday into next week where highs of 40s and 50s will become widespread across the northern US, with 60s and 70s across the southern US, locally 80s.”
Although the market may be ripe for a short-covering rally, the move is not likely to last because hedgers will be looking to pounce on any decent rally. EBW Analytics Group CEO Any Weissman summed it up best when he said, “While a rebound is still possible if cold weather returns, risks of severe price spikes have been largely eliminated. The rebuild of storage lays the groundwork for much lower gas prices through most of 2019.”
This article was originally posted on FX Empire
