US natural gas prices are dropping over 5% today as a new set of weather forecasts for the United States continue to show higher temperatures in the days ahead. A point to note is that while forecasts from as recently as Tuesday this week pointed to temperatures 'leaning below average' in key US heating regions, a new set released yesterday suggests that temperatures in those regions are more likely to be 'near normal'. This means that demand for heating, and in turn natural gas, is likely to be lower in the next 8-14 days than previously anticipated and this is putting pressure on US natural gas prices today.
Forecast from a week ago (March 9, 2023) pointed to below-average temperatures for the next 8-14 days period. However, new forecasts (March 16 ,2023) point to a significant improvement in US Midwest. Source: Bloomberg
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Even forecasts from earlier this week (March 14, 2023) pointed to temperatures 'leaning below average' in the Midwest. Source: Bloomberg
Taking a look at NATGAS chart at H1 interval, we can see that the commodity is attempting to break below a key short-term support zone ranging above 2.35 handle. This zone saw numerous price reactions over the past month and a half, showing that a bull camp can be found there. Source: xStation5