This week has been red for Natural Gas market. Usually
around this time of the year, prices peak and we see a new high every year. Last
year around this time, shorts were squeezed out of the market when NG prices
were trading at 360 on MCX. In
international markets, prices touched almost $4.00 and all shorts positions were
squeezed out of the markets.
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| Generatebucks - Natural Gas Prices Forecast |
Natural gas is a seasonal commodity and prices are directly proportional
to the demand. Mostly around this time of the year entire US welcomes heavy
winter. This year due to low demand and warmer weather forecast, prices have been
trading in oversold zone.
Early hits morning Natural gas prices opened in green zone
but with lack of interest from buyers, prices move down.
Prices trading around support
Natural Gas prices have been trading around support for few
weeks. The 181 level is a major psychological
support. If you look at international markets, 2.50 acts a major support zone.
Buyers tend to jump around this point since this is considered an oversold
zone.
A pull back is overdue since demand seems to be low but we
can expect prices to touch $2.75 and if this resistance breaks than we can expect
prices to trade to $3.00. With seasonal demand and favorable weather forecast,
we can expect prices to trade above $3.00 as well.
Short-term weather forecast
According to NatGas Weather for November 21 – 27, US will be
mild to warm today with highs of 60s & 70s, warmest over Texas and the
South, then cooling as the western US system tracks through Friday, eventually
reaching the East this weekend. High pressure will bring warmer conditions over
the eastern half of the country next week as cold air pours into the West.
Overall, moderate demand.
Natural Gas EIA Report
Today’s EIA report will kick-off the withdrawal season. Traders
are saying today’s report that covers the week-ended November 15 is likely to
show a much larger-than-average withdrawal in the upper 80s Bcf. A consensus of
analysts is pegging 86 Bcf as the over/under level.
Bloomberg analysts were looking for a median prediction of
88 Bcf, with estimated withdrawals ranging from 82 Bcf to 99 Bcf. The ICE EIA
Financial Weekly Index futures settled Tuesday at minus 87 Bcf. Natural Gas
Intelligence (NGI) was predicting a 101 Bcf withdrawal.
Working gas in storage was 3,638 Bcf as of Friday, November
15, 2019, according to EIA estimates. This represents a net decrease of 94 Bcf
from the previous week. Stocks were 506 Bcf higher than last year at this time
and 60 Bcf below the five-year average of 3,698 Bcf. At 3,638 Bcf, total
working gas is within the five-year historical range.
The numbers released will definitely support prices but
demand has to grow significantly for a big rally.
Natural Gas price forecast and trading tip
With low demand and warmer weather forecast, I am not
expecting a rally yet. For a significant rally or prices to take a huge jump,
weather should favorable and demand should increase.
Despite Natural Gas prices trading in oversold zone, I don’t
see too much greenery in this market. Based on the next weather forecast and
EIA report, buyer might show interest and a rally could happen
I would suggest buyers to stick around and buy on any dips
since a rally is overdue and will happen. I see Natural gas prices to trade
around 230 with demand increasing in coming weeks.
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