Natural Gas Futures Said Stuck in 'Neutral Territory' as Prices Called ... - Natural Gas Intelligence

Natural Gas Futures Said Stuck in ‘Neutral Territory’ as Prices Called Slightly Lower - Natural Gas Intelligence
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Natural Gas Futures Said Stuck in ‘Neutral Territory’ as Prices Called Slightly Lower

With traders shrugging off a supportive temperature outlook heading into the back half of March, including colder forecast trends over the weekend, natural gas futures hovered close to even in early trading Monday.

The April Nymex contract was off 0.5 cents to $2.425/MMBtu at around 8:40 a.m. ET.

Weather data saw a mix of trends over the weekend, including colder adjustments from the European model, which continued to advertise a notably chillier outlook versus its American counterpart, according to NatGasWeather.

The latest European model projections pointed to a “moderately bullish overall U.S. pattern” for the 15-day projection period, versus an “only slightly bullish” outlook from the American dataset, according to the firm.

“Essentially, the weekend weather data is still cold enough to remain to the bullish side,” NatGasWeather said. “In addition, longer range weather maps continue to favor a cool start to April, although subject to large changes this far out.”

Assuming forecasts don’t trend warmer, colder than normal temperatures for the second half of March should shrink the storage surplus to the five-year average back toward the plus-300 Bcf mark, according to NatGasWeather.

Recent price action could signal a “bearish bias” for natural gas, according to EBW Analytics Group.

“Friday’s trading indicates natural gas trending below the 20-day moving average and toward key support at $2.38,” EBW analyst Eli Rubin told clients Monday. “Although the modest cooler weekend weather shift may firm near-term demand, if support fails it could open up key bearish risks.”

Combined with “bearish technicals,” the market’s “muted” response to colder weekend forecast trends implies “near-term downside price risks” for the prompt month, Rubin said.

“Although we anticipate fundamental tightening and narrowing storage surpluses to provide support into early April, after several bullish false starts this winter the market may wait for supportive data to emerge before edging higher,” the analyst added.

ICAP Technical Analysis, meanwhile, recently characterized the outlook for natural gas as decidedly neutral.

“Still stuck smack in the middle of neutral territory,” ICAP analyst Brian LaRose told clients. “Bears need to crack $2.113, $2.069 and $1.976 for us to lower the bar once again. Bulls need to get Henry Hub over $3.009-3.034-3.069 for us to raise the bar. In between, we are forced to sit tight and wait patiently.”

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