Yahoo Finance Natural Gas Price Fundamental Daily Forecast – Daily Reversal Up Could Be Signaling Return of Buyers
Natural gas futures managed to eke out a small gain on Wednesday after posting another new low for the year. The lower-low, higher-close chart pattern may actually be a sign that buyers are coming back into the market. It could also have been caused by profit-taking and position-squaring ahead of Thursday’s U.S. Energy Information Administration’s weekly storage report.
On Wednesday, February Natural Gas futures settled at $2.732, up $0.038 or 1.41%.
The massive sell-off the last two weeks indicates market bulls have been largely disappointed by the latest winter forecasts for seasonal weather through the end of the year. According to the weather services, there is expected to be a major shift in temperatures over the next 1 to 2 weeks. This forecast has been encouraging heavy shorting and could even lead to more over the near-term.
According to NatGasWeather.com for the period December 13 to December 19, “Several cold shots will sweep across the Midwest and eastern U.S. this week with lows of single digits to 20s to drive strong heating demand, although rapidly warming this week-end, then with a mix and cool periods next week. The West will be mild apart from cold valley inversions. The South will be mild to warm with highs of 50s to 70s today, but briefly cooling Thursday to Friday. Overall, national demand will be high through early Saturday then moderate.”
Forecast
Wednesday’s technical closing price reversal bottom may be a sign that the buying is stronger than the selling at current price levels. A trade through $2.763 will confirm the chart pattern. This could trigger the start of a 2 to 3 day rally with $2.940 the first major upside target.
Thursday’s EIA storage report for the week-ending December 8 is expected to show a draw of about 63 billion cubic feet (bcf). That compares with a gain of 2 bcf in the preceding week, a fall of 147 bcf a year earlier and a five-year average decline of 78 bcf.
Total natural gas in storage currently stands at 3.695 trillion cubic feet (tcf), according to the EIA. That figure is 264 bcf, or around 6.6%, lower than levels at this time a year ago and 36 bcf, or roughly 1%, below the five-year average for this time of year.
This article was originally posted on FX Empire
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