Mild Weather Puts a Damper on Natural Gas
Today’s Spotlight Market
With the end of cold weather approaching in the US, the price of Natural Gas futures has fallen.? Weather conditions are expected to be at or above average on the East Coast and the South through April 5th.? Several cities in the Northeast may hit the 60 degree mark in coming days, suggesting more mild weather may be on the way.? After nearly doubling in value over a three and a half month period, prices have given back much of the gains in short order.
Fundamentals
Natural Gas inventory levels totaled 896 billion cubic feet in the week ended March 31.? This marks the lowest level of US stockpiles since 2003, according to the EIA.? Natural Gas supplies were at record deficits of 50.8% compared to the five-year average.? Inventory levels are expected to remain at low levels and below average through October, despite record production.? Natural Gas production is expected to rise by 2.5% to 71.96 billion cubic feet a day in 2014, which would mark the ninth consecutive year of increases.? Even with production ramping up another year, the tight inventory levels could suggest that panic buying is a possibility if weather shifts.? All has been quiet in Russia over recent days.? The quiet has sucked some of the fear premium out of energy prices.? Like the weather, hostile actions by Russia could trigger panic buying. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the May Natural Gas contract testing the 4.25 support level.? Failure to hold here could result in the price of Natural Gas falling back to the mid-3.00?s.? May Natural Gas prices have retraced beyond the 61.8% Fibonacci retracement level.? Prices are trading below the 100-day moving average.? Several more closes below the average could be seen as bearish.??
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