Natural Gas News: Spring Is Coming!

| March 6, 2015 | 0 Comments

natural gas containerNatural Gas News Flash!

Yesterday’s EIA Natural Gas Storage report revealed some important natural gas news.

First of all, working gas in storage fell by 228 billion cubic feet (bcf) for the week ending February 27th.  The reading was slightly bullish due to the fact that it was a larger weekly drawdown than analysts expected, and bigger than last year’s storage withdrawal of 144 bcf.

However, as it sits now, US storage levels are at 1,710 bcf.  That’s 40% higher than last year’s levels at this time and a mere 7.7% below the 5-year average.

Here’s the EIA storage chart…

Natural Gas News, EIA storage trends

As you can see, current inventories (blue line) are substantially higher than they were last year at this time (vertical dotted lines).  What’s more, current storage levels are well within the confines of 5-year average levels (grey shaded area).

Let’s dig a little deeper into what yesterday’s data means for natural gas prices going forward…

It’s Cold…  But Spring Is Coming!

Last week’s large inventory withdrawal was due to the bitterly cold weather that has been plaguing the Eastern and Central US.

If you live in these areas, you’re likely sick and tired of Old Man Winter.

The price of natural gas reacted to yesterday’s report with mild bullish enthusiasm.  The commodity ended the trading session at $2.84 mmBtu, a 7 cent (2.34%) daily gain.

Here’s a yearly chart of natural gas…

Natural Gas News, A chart of natural gas

As you can see, the commodity is still hanging around 52-week lows.  Despite the brutal Eastern US winter, producers have supplied the market with ample inventory.  Abundant supply is the prime factor keeping natural gas prices under wraps this winter.

Where do prices go from here?

One look at the NOAA 8-14 day forecast should give you a good idea…

Natural gas news, NOAA forecast map

According to the government weather agency, a warming trend is moving in fast.

Most of the nation will enjoy above average temperatures over the next few weeks.

As a result, natural gas heating demand is about to weaken drastically.  In fact, I’m fairly certain last week’s +200 bcf withdrawal is the last we’ll see this winter.

That’s why most analysts are leaning on the bearish side of the natural gas market…

We’re entering the low demand shoulder season and supplies are relatively abundant.

That’s why some analysts are forecasting the commodity to drop back to the $2.50 level, and possibly lower in coming weeks.

But here’s the deal…

While fundamental data is certainly bearish, we’re entering a seasonally bullish time for natural gas.

On a 20-year price study, the commodity typically bottoms in mid-March and rises into June.

Given this historical trend, I give credence to the idea natural gas will trade sideways to slightly higher over the next few months.   However, you can certainly expect a bumpy ride for the commodity, as bearish supply data will keep bulls from getting too out of control.

Until Next Time,

Justin Bennett

***Editor’s Note***  If you’re new to the natural gas markets, be sure to check out this article!

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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Category: Energy, Natural Gas

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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