On March 14, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage declined by 9 Bcf from the previous week, compared to analyst consensus of -3 Bcf. The five-year average for this time of the year is a draw of -87 Bcf.
At current levels, stocks are 336 Bcf higher than last year at this time and 629 Bcf above the five-year average of 1,696 Bcf.
The current demand for natural gas remains low due to mild weather, so the bigger-than-expected draw may provide some support to natural gas prices. Weather forecasts indicate that weather may get colder next week, which could provide additional support to the market.
The price of natural gas moved higher as traders reacted to the EIA report. Natural gas bulls had no positive catalysts for days, so they are encouraged by the bigger-than-expected storage draw.
While prices remain close to multi-year lows, natural gas is not technically oversold. There’s plenty of room to gain additional downside momentum, and the market needs material positive catalysts to break the current trend.
It remains to be seen whether EIA data will serve as such a catalyst. Stocks are well above the five-year average for this time of the year, and production cuts have not yet played a significant role in supporting the market as demand is low due to mild weather.
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This article was originally posted on FX Empire
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