Welcome to Weekly Natural Gas recap Edition of Natural Gas Daily!
Natural gas prices finished the week up 1.37%.
This week saw our bullish natural gas position via short DGAZ get stopped out following a 5.6% return. Natural gas started to come under pressure after a steady rise the first three days followed by bearish tilting weather outlook.
Although the latest weather models show slightly lower HDDs, most of March have been trending colder than expected and the end of March is expected to see the trend continue.
Take for example the gas-weighted heating degree days forecast from ECMWF-EPS and GFS-ENS:
The bullish March outlook has reduced our end of withdrawal storage level to 1.388 Tcf.
In the near-term, if the weather remains supportive, we could see April contracts attempt $2.80/MMBtu and possibly retest the 50-day moving average. But in the medium-term and over the course of the injection season, our view is that natural gas prices will remain rangebound. Lower 48 production continues to move higher and with additional takeaway capacity coming on in 2018, we see a potential supply average that is greater than the current forecast needed to push storage back to the five-year average: ~80.5 Bcf/d. (See write-up here for the explanation.)
For readers that are interested in following the daily supply and demand for the natural gas market along with real-time trade alerts and updates on our trading positions, you should consider signing up for HFI Research Natural Gas. See here for more info.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in DGAZ over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.