Natural gas futures for May ’15 delivery fell on Monday morning, a common theme in recent weeks as the commodity gaps down on Monday mornings from its Friday closing settlement price.
Traders and investors were eyeing forecasting models that showed more warmth than previously forecast at the end of last week. Previous GFS models showed below average temperatures consuming much of the continental U.S., to include the West from April 6 to April 12, but current models no longer show the intensity of these colder temperatures.
While the below average temperatures were only expected to create small heating demand, natural gas bulls are simply looking for small withdrawals to counter last week’s injection of 12 Bcf into storage.
Early estimates for Thursday’s Weekly Gas Storage Report once again range widely because many facilities are in the process of maintenance and switching from withdrawals to injections. The early estimates range from a -7 Bcf withdrawal to a 16 Bcf injection.
“While the fewer number of forecasted heating degree days is driving the price down after last week’s injection, I expect to see a bounce this week to test the $2.68 level,” said Steve Kingston, a reporter for NatGasInvestor.com.
“However, the $2.68 level is likely to be strong resistance because it stood as strong support for about 45 days while natural gas moved in a sideways channel.”
The commodity is nearing its February 6 low of $2.579 per mmBtu as it traded at $2.633 in early trading Monday. Despite the gap down in earlier trading, the commodity was two cents higher than its overnight low of $2.611 per mmBtu.