It appears shoulder season is coming to an end in the natural gas markets. NOAA’s 6-10 and 8-14 forecasts are showing above normal temperatures for the western half of the nation. These temperatures have the chance of shifting east giving the US its first taste of summer. Shoulder season is a time during the spring and fall months when demand for natural gas is typically at its lowest.
A hot summer will be needed to encourage a sustained bull run this year. The 2015 hurricane season is expected to have a limited impact on the US. According to Colorado State infamous William Gray, “We anticipate that the 2015 Atlantic basin hurricane season will be one of the least active seasons since the middle of the 20th century. It appears quite likely that an El Niño of at least moderate strength will develop this summer and fall. The tropical and subtropical Atlantic are also quite cool at present. We anticipate a below-average probability for major hurricanes making landfall along the United States coastline and in the Caribbean.”
The warmer temperatures would be welcomed by bulls as Nat Gas has been in a decline since last June. Current US supplies are higher than last year at this time but below the 3 and 5 year average and well below 2012 when natural gas prices were routed. Yet, prices are currently at the lowest levels we have seen since that time. Last week’s +63bcf build was above expectations. The market initially sold off but shook off the bearish new and finished the day and the remainder of the week higher. When a market fails to sell off on bearish news, it is often a sign that the worst is behind.
The estimate for Thursday’s EIA weekly storage report is a +88bcf build for the week ending April 17. A bearish report could potentially send May futures to major support found at 2460 and 2400. A lower than expected build could send prices toward major weekly support found at 2720. Options for the May contract expire on Monday.
If you have questions on regarding the energy markets, would like daily support and resistance emailed to you, or would like to discuss an investment in the futures markets, feel free to call me directly at 570-657-0523 or send an email to bdeutsch@iasg.com. You can also reach us through our website at www.iasg.com