Natural Gas Price Fundamental Daily Forecast – Looking for Hedging Pressure Inside $2.774 to $2.823
Natural gas prices continued to edge higher on Wednesday amid speculation that cold weather in key demand areas will extend into next week, fueling a jump in heating demand.
On Wednesday, April Natural Gas futures settled at $2.777, up $0.028 or +1.02%.
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The heating fuel closed inside the major technical retracement zone that could determine the near-term direction of the market.
According to NatGasWeather.com, “Another strong weather system will track through the East with rain, snow and wind. This will bring an increase in demand through Friday as lows behind the cold front drop into the teens to 30s. After a very brief break this weekend, another winter storm will move into the East early next week.”
Forecast
Looking ahead to today’s U.S. Energy Information Administration’s weekly inventories report, traders are expecting a draw of about 61 billion cubic feet (bcf) in the week ended March 2.
This week’s weather news has been priced into the market. This helped build the support base last week. The current rally is being fueled by speculation over the return of cold weather over the next 10 to 14 days.
Looking at the daily chart, the main trend is down. The major range is $2.983 to $2.565. Its 50% to 61.8% retracement zone is currently being tested. Trader reaction to this zone is likely to determine the near-term direction of the market.
Since the main trend is down, short-sellers are likely to resume taking on new positions on a test of the retracement zone. Look for weakness to ensue on a test of the zone once the current 10-14 day weather outlook has been priced into the market.
Watch the price action and read the order flow at $2.769 today. Trader reaction to this level will tell us if the buying is getting stronger or if sellers are retaking control.