As anticipation mounts for the impending government storage report, U.S. natural gas futures are experiencing a downturn, with traders eyeing the crucial 50-day moving average at $1.961, a notable trend indicator since late January. This trend has prompted preparations for potential market volatility.
At 13:23 GMT, Natural Gas is trading at $1.831, marking a decrease of $0.054 or -2.86%.
EIA Report Projections
Attention is squarely focused on today’s eagerly awaited EIA weekly storage report, poised to unveil whether market equilibrium has shifted. Current projections hint at a build ranging from +8 to +15 Bcf, slightly below the 5-year average of +24 Bcf. This modest build is attributed to cooler-than-normal temperatures in regions such as the Midwest, Northeast, and California, offset by warmer conditions elsewhere. The consensus expectation sits at a build of +13 Bcf.
Insights from The Wall Street Journal
Analysts surveyed by The Wall Street Journal anticipate a modest uptick in U.S. natural gas inventories, estimating a rise of 11 Bcf to 2,270 Bcf. This figure falls short of the five-year average injection for the same week, signaling a marginal reduction in surplus storage that concluded the heating season 39% above average.
Global Geopolitical Factors
Global events are also influencing the natural gas market, notably the recent assaults on Ukrainian gas storage facilities by Russia. These actions have propelled gas prices in Europe upward, highlighting the vulnerability of energy infrastructure in conflict zones.
Weather and Demand Outlook
The NatGasWeather forecast for April 11-17 outlines a series of weather systems traversing the U.S., accompanied by mild to warm temperatures. This weather pattern suggests a diminished demand for natural gas in the immediate future.
Short-Term Market Forecast
Given the projected below-average inventory build, compounded by geopolitical tensions and forecasts of mild weather, the short-term outlook for the natural gas market tilts bearish. The forthcoming EIA report is poised to catalyze market fluctuations, particularly concerning inventory levels and European market responses to geopolitical uncertainties.
Technical Analysis
Natural gas futures are sliding lower on Thursday after briefly turning upwards earlier in the week. A breach of $1.746 would reverse the short-term trend downwards.
Today’s pivotal level to monitor is the 50-day moving average at $1.961. With the intermediate trend on a downward trajectory, attention is drawn towards potential selling pressure upon the initial test of this trend indicator. However, surpassing it could signify a shift in sentiment and potentially fuel an upsurge.