Natural Gas Price Fundamental Daily Forecast – Bearish Traders Believe Supply is Ample
Natural gas prices plunged on Monday, the first trading session of the new injection season, as weak speculative buyers finally threw in the towel and aggressive short-sellers increased their positions amid reports that the near-term threat of lingering cold had diminished. Additionally, despite supplies coming in under the five-year average, traders believe the market is amply supplied.
May Natural Gas futures settled at $2.683, down $0.050 or -1.83%.
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Forecast
The main trend is down which indicates the market is in the strong hands of short-sellers. The short-term range is $2.831 to $2.610. Its 50% to 61.8% retracement zone is $2.720 to $2.747. This zone recently rejected the speculative buyers. Monday’s price action helped make $2.764 a new secondary lower top.
Lower-tops and lower-bottoms, trading under a retracement zone and the posting of a new secondary lower top are all signs that the selling is greater than the buying at this time.
According to Platts Analytics, U.S. dry production levels reached a new all-time high at 78.4 Bcf/d levels seen the week-ended March 30.
The current weather forecasts call for additional chilly weather systems to track across the Great Lakes and Northeast next weekend to keep national demand stronger than normal. However, traders fell that this is the last shot of cold this season. Although we could see 1 or 2 more weekly withdrawals, traders seem to be unfazed by the news, preferring to focus on rising production instead.
Look for the weakness to continue as long as the market remains under $2.720. If selling volume increases, we could see a test of $2.610 to $2.600 later this week.