Natural Gas Prices fall after EIA forecasts
2023.02.08 08:18
Natural Gas Prices fall after EIA forecasts
The EIA’s short-term outlook on Feb. 7 indicates that Henry Hub natural gas spot price will average $3.40 per million British thermal units (MMBtu) in 2023, down almost 50% from last year and about 30% from our January Short-Term Energy Outlook (STEO) forecast. This level is a pivotal point for both bulls and bears because of the price movements since Feb. 3, when the futures tested a multi-year low at $2.341 after a sudden jerky move from
Despite the possibility of a U-turn and a return to colder temperatures until late March as a result of delayed winters, the short-term weather outlook is without a doubt still warmer up until the middle of February.
Technically, the same hedge funds that started pushing natural gas futures from the peak at $10.005 on Aug. 23, 2022, could continue to push the prices upward above the pivotal point at $3.5, keeping the natural gas futures 5% above the lows tested on Feb. 3.
After a breakout on Feb. 6, natural gas futures are maintaining above the 200 DMA on the 15-minute chart. This is in response to the short-term outlook provided by the EIA, which appears to be clear enough to continue to form a base at the current levels prior to the onset of the subsequent bullish move before this weekly closing.
Indeed, wild price swings will be present due to weather uncertainty until the middle of this month, so volatility could continue to rise. According to NatGasWeather.com, weather systems with mild to cool temperatures will impact the West and Northern Plains, with highs in the 30s to 60s. Natural gas futures may trade between $2.777 and $3.858.
However, temperatures in the 50s to 80s are expected in the eastern, central, and southern parts of the United States. A colder weather system will move into the central United States toward the end of the week, bringing rain, snow, cold temperatures in the 10s to 30s, and lows in the -0s to 30s. It will then move into the East this weekend, causing a slight increase in national demand. Overall, there will be very little demand for natural gas through the weekend, but it will be moderate.
Disclaimer: This analysis’s author does not hold any Natural Gas futures positions. Natural Gas is one of the world’s most liquid commodities, so readers are advised to take any position at their own risk.
