Natural gas prices are trading in the range of $2.422 -$2.592 from the last eight trading session on the backdrop of mixed signals. Strong export demand, low production and demand from electricity production is supporting the prices but weakening heating demand due to normal temperature forecast is limiting the gains.
Weather forecasting agency Maxar on Wednesday is projecting below-normal temperatures for the Central, South, and eastern U.S. from Mar. 29-April 2. Also, as per Bloomberg data, US natural gas demand on Wednesday fell by 17% y/y to 63.6 bcf.
However, natural gas prices found support from export demand, demand from electricity production and lower US domestic production. As per Bloomberg data, Gas flows to US LNG export terminals on Wednesday rose +23% y/y to 11.4 bcf. US gas production on Wednesday fell -2.6% y/y to 90.718 bcf/d
Natural gas prices are likely to get fresh direction from the weekly inventory report which will be released later today. The market expects inventories to fall by 21 bcf, a smaller draw than the 5-year average for this time of year by 51 bcf. Last Thursday's weekly EIA report indicates that inventories in the week of March 12 fell by 11 bcf to a 1-3/4 year low of 1,782 bcf, against expectations of a drop of 18 bcf. At present natural gas inventories are 5.0% below the 5-year average.
Natural gas prices are trading in the $2.422 -$2.592 may continue bearish trend if prices break below the key support level of $2.422, it may find next support level around $2.364 and $2.306. Natural Gas prices are likely to face stiff resistance near 20 days EMA at $2.630 and 50 days EMA at 2.702