Oil has just witnessed a stunningly bullish U.S. dataset for last week. Natural gas could be up next.
The U.S. Energy Information Administration is expected to announce a gas withdrawal of 210-215 billion cubic feet from storage for the week ending March 8 in data due at 10:30 a.m. ET.
Natural Gas Daily Chart
Coming barely 24 hours after its bullish weekly oil inventory report that stumped analysts’ expectations, the EIA’s latest numbers on gas could provide the last big jolt for those long gas and hoping to crack the market’s range-bound price trap of under $3.
Gas Longs Counting On Exceedingly Bullish Draw
But even if the EIA’s gas report for last week turns out to be exceedingly bullish—a good possibility given that the data would cover a stretch of notable cold in one of the most frigid winters thus far in modern U.S. history—the impact on the market might be fleeting.
That’s because, according to analyst Dominick Chirichella of the DTN-owned Energy Management Institute in New York, temperatures across the U.S. were expected to rise in the coming weeks as the winter bows out to spring.
Said Chirichella in an outlook shared with Investing.com early on Thursday:
“Much warmer-than-normal temperatures will continue in the Midwest, East and South for a couple more days, and below-normal temperatures are forecast for most of the Central and Eastern U.S. in the 6-10-day period. Then above normal temperatures are possible again in the 11-15 day period.”
Fundamentals Look Mixed With Hot-Cold Temperatures Next
The hot-and-cold blowing weather isn’t too comforting for Chirichella, who said he was maintaining his market view and bias at neutral.
He also adds that it “may be too little, too late” for the remaining cold weather to do much help for the bets placed by gas bulls.
Scott Shelton, energy futures broker and commentator at ICAP in Durham, North Carolina, said in an outlook published on Wednesday that while he was bullish overall on the market, he had “some concerns about what a warm April will bring for prices”.
If indeed gas consumption was at 210-215 billion cubic feet last week, it could leave gas in storage at just between 1.175-1.180 trillion cubic feet—more than 30% below the five-year average.
Range-Bound Trading Could Continue
Dan Myers, analyst at Gelber & Associates, a gas consultancy in Houston, remarked:
“Updated forecasts have significantly reduced the amount of heating demand expected in late March as the shift towards shoulder season begins. This could result in a net injection by the end of the month, although there is plenty of uncertainty around these forecasts to be resolved in the next couple of weeks.”
Without an outright bullish signal, gas futures on the New York Mercantile Exchange’s Henry Hub may not break out from their recent range.
In Wednesday’s trade, Henry Hub’s most active May gas contract settled at $2.834 per million metric British thermal units (mmBtu), rallying more than 2% over the past two sessions but still remaining almost 4% down on the year. The front-month April contract settled at $2.82 per mmBtu.
Technical analysts at Investing.com have a “Neutral” call on their daily outlook for April gas, pegging a top-end resistance of $2.958 and strongest support of $2.703 for the contract.