Looking to the Futures
Natural Gas Falls on Inventory Build-up
Milder weather in the United States has been pushing down on natural gas futures, as people in the US opt to open their windows than use energy to heat their homes. May natural gas, /NGK25, settled at $3.329 per MMBtu, up $0.004 from previous settlement.
The 3-month seasonal temperature outlook by the National Oceanic and Atmospheric Administration (NOAA) has a higher than normal temperature for the lower-48 of the United States which mean less energy consumptions during this time if it holds true. The 6-month outlook indicates a higher than normal temperature going out to August. A sizzling summer would indicate heavy energy consumption as people cool their homes.
NOAA anticipates a transition form La Nina to El Nino over the course of April which fits with the 3 and 6 month outlook reports. El Nino is linked with dryer conditions in the northern half of the US and more precipitation in the gulf states.
An increase in underground storage would be bearish for natural gas prices. Last week the Energy Information Administration, EIA, reported an increase in stockpiles by 57 Bcf with working gas storage of 1,830 Bcf. Inventories were 450 Bcf less than this time last year, a 19.7% change, and 40 Bcf below the 5-year average, 2.1% change. Traders will be looking to the upcoming storage report on Thursday.
Since Russia’s invasion into Ukraine in 2022, the European Union has pledged to quite Russian fuels by 2027, however, they have delayed its plans to do so due to uncertainty with US tariffs. The EU has successfully moved away from Russian fossil fuels but was still receiving 19% of its overall natural gas supplies from Russia. Norway has become the EU’s primary natural gas supplier trailed by Russia and the United States.
The Trump Administration has highlighted the EU’s energy need as a focus to eliminate the trade deficit.
Technicals
May natural gas, /NGK25, settled at $3.329 per MMBtu, up $0.004 from previous settlement. May natural gas opened at 3.318 for the start of 4/16 trading day.
On the daily continuous chart, the price of natural gas has been declining since its 2-year high of $4.901 in March. It is currently below the 50-day simple moving average ($3.905) and approaching the 200-day simple moving average ($3.049).
The 14-day RSI is at 36.95% and moving lower towards the oversold threshold of 30%. Time will tell with this, but the 200-day SMA and the oversold threshold may overlap creating some possible support.
The directional movement index points to a clear bearish trend in the price action of natural gas. The average directional index (white) is moving upwards which points to a growing trend. The positive directional index (green) is moving lower while the negative directional index (red) is moving higher. These point to the general direction of the underlying security which in this case is bearish.
Contract Specifications
Economic Calendar
MBA Mortgage Applications Index 7:00 AM ET
Retail Sales 8:30 AM ET
Retail Sales ex-auto 8:30 AM ET
Capacity Utilization 9:15 AM ET
Industrial Production 9:15 AM ET
Business Inventories 10:00 AM ET
NAHB Housing Market Index 10:00 AM ET
EIA Crude Oil Inventories 10:30 AM ET
Net Long-Term TIC Flows 4:00 PM ET