Natural gas futures continue to rise as forecasts cool and production underperforms

Natural gas futures added to gains in early trading on Wednesday as fresher forecasts and lagging supply numbers supported prices. After rallying 28.7 cents in the previous session, the April Nymex contract rose another 8.9 cents to $5.276/MMBtu around 8:40 a.m. ET.

Updated daily estimates continued to show underperformance in domestic production, Bespoke Weather Services told its customers on Wednesday.

“Production is still struggling to break through the 93,100 cfd threshold, which is definitely not bearish, and that’s probably where the market is headed, as more was expected. production has already returned,” Bespoke said. “There is still plenty of time for that to happen, but the further we go without even getting back to year highs, the more difficulty we see in filling storage comfortably by the end of injection season.”

This would be especially true in the event of a hotter summer, the firm added.

As for the updated 15-day forecast, Maxar’s weather office highlighted a “big colder shift” from the Midwest to the East within six to 10 days, Monday through April 1.

“The biggest changes occur early in the period and are associated with high pressure,” Maxar said. “This surface high has Canadian origins and is sustaining lower and well below normal temperatures. At the coldest, the forecast is in the mid-20s for lows in Chicago on day six and New York on day seven.

Further into the 11-15 day period (April 2-6), the company’s updated forecast saw cooler trends for the eastern half of the Lower 48, showing “temperatures near and slightly below normal in the period composite”.

Bespoke Weather Services also observed noticeable cooler day/day trends, bringing the projected gas-weighted degree-day totals for the 15-day period down to a near-normal overall level.

“We’re not seeing anything particularly strong, but the gradual change from a little warmer to now cooler than normal ‘over a series of days from this weekend into next week’ is definitely worth watching. rated,” the firm said.

Meanwhile, from a technical standpoint, the May contract closed above a key resistance band at $5.184-5.199-5.209 on Tuesday, observed ICAP Technical Analysis analyst Brian LaRose.

“However, I wouldn’t consider this a decisive breach,” LaRose warned. “A follow-up will be necessary. Looking up to $5.536-5.572 or even $5.839-5.912 next if the bulls can sustain the rally. Should natural gas reverse suddenly, we will need to quickly assess the possibility of a double top rather than a breakout.