The market seems to be oversold and the release of the EIA
report allowed buyers to enter the market with confidence.
Weather outlook
According to NatGasWeather for January 24 to January 30, US
might get a bit colder for few more days and with polar blast advancing through
the Midwest will impact the temperature and we could expect cold days ahead.
Overall, demand will be moderate today then high-very high Friday through
Sunday.
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| Natural Gas storage report |
Looking at mid-term weather, temperatures are expected to be colder around Feb 3rd, so we could expect a solidly bullish pattern through February 2-3, then becoming neutral to bearish.
Natural Gas EIA Storage report
Overall, the EIA estimates for the week-ending January 18 indicated
another week of below-average, deficit reducing withdrawals.
The range of expectations were wide with Bloomberg looking for a
155 Bcf draw with predictions ranging from minus 85 Bcf to minus 163 Bcf.
Reuters looking for a 154 Bcf withdrawal. Its range of guesses were minus 130
Bcf to minus 166 Bcf. The ICE EIA Financial Weekly Index futures settled on
Tuesday at minus 160 Bcf.
Natural Gas Inventories Decline More than Expected
The Energy Information Administration reported that working
gas in storage was 2,370 Bcf as of Friday, January 18, 2019. This represents a
net decrease of 163 Bcf from the previous week. Stocks declined more than
expected and are 33 Bcf higher than they were at the same time last year and
approximately 10% lower in price.
Natural Gas price prediction
Looking at the weather outlook and EIA report, we can expect
NG futures to bounce but this rally will be limited. It is advisable to averse
risk and follow strict stop loss.
With a medium term outlook, I would advise to create short
position in Feb NG contract at 221and hold your position for target of 215-212
with stop loss of 230.
Intraday traders should look at buying position for short
trade. One can expect a short rally today.
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