Natural Gas Price Fundamental Daily Forecast – February Remains on Track to Be in the Top 5 Coldest on Record

Natural gas futures are trading marginally lower early Tuesday following a slightly better close the previous session. The price action left traders a little confused with the frigid cold descending from Canada into the Lower 48 seen possibly continuing into March. Weather model volatility is being blamed for the two-sided price activity.

At 06:20 GMT, March natural gas futures are trading $2.865, down $0.017 or -0.59%.

Bespoke Weather Services Outlook

Even with big swings in the weather data, theres little argument that the next couple of weeks are poised to be the coldest the country has experienced in years. The issue in the near term is that the European model initially pushed back the arrival of the next bout of extreme cold, shedding demand from the outlook for this week and for later in the month. However, by the afternoon, the model added it all back and then some, with February remaining on track to be in the top 5 coldest on record, according to Bespoke Weather Services.

“…the other key is that we do not yet see warming to even normal yet at the end of the runs,” the forecaster said. “If cold continues beyond day 15 and into March, we should see a steady climb in prices, at least when smoothed out.”

Spot Prices Dip Lower

Natural Gas Intelligence (NGI) reported on Monday that spot gas prices also retreated across most of the country, though trading in the Northeast was notably volatile. New England cash traded as high as $14.000, but NGIs Spot Gas National Average dropped 2.5 cents to $3.985.

Early Look at Thursdays EIA Storage Report

Analysts at the Schork Group indicated the “early whisper number” for the next Energy Information Administration (EIA) report is in the mid-180s Bcf, while the following two reports could fetch draws well into the 200s Bcf. This would bring total working gas in storage to 2,000 Bcf by February 19, NGI reported.

“This is significant,” The Schork Group said. “As a result, the odds of finishing this winter above the five-year average have collapsed.”

Daily March Natural GasDaily Forecast

The price action is confusing the fundamental traders, who are looking for clarity in the weather forecasts for February 15 into early March.

Technically, the main trend is up, but momentum shifted to the downside on Friday.

A trade through $3.057 will signal a resumption of the uptrend with $3.320 the next potential upside target.

A move through $2.734 will change the main trend to down with the next target area $2.663 to $2.570.

The main range is $3.320 to $2.268. The March futures contract is currently straddling its 50% – 61.8% retracement zone at $2.794 to $2.918.

A bullish tone could develop on a sustained mover over $2.918. We could see more long liquidation on a sustained move under $2.794.