Naturalgas on MCX settled up 0.72% at 195.40 pushed higher bouncing back from heavy losses in the prior session as forecasts showing cooler weather on the way boosted the heating fuel. Snow showers and gusty winds remain in the wake of Tuesday’s powerful winter storm that brought a wintry mess to the Mid-Atlantic and Northeast, according to forecasters at NatGasWeather.com.
Changes in seasonal temperatures are a pivotal factor for natural gas markets, and warmer winters mean weaker demand. Natural gas consumption spikes during winter months as millions of people crank up the heat, while consumption patterns descend into valleys in the spring and fall, with a smaller peak in the summer.
A bout of warm weather during winter can upend gas demand forecasts. And that is exactly what happened this year. According to NOAA, the U.S. just posted its second warmest February on record, dating back to when data collection began in the 19th century. Average temperatures were 7.3 degrees higher than average. Heading into winter, natural gas traders are expected colder temperatures to help draw down on record high inventory levels.
But it wasn’t to be. After mild temperatures swept across the continent for long stretches of February, natural gas spot prices crashed by the end of the month, down more than a third compared to December highs. Meanwhile, now participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw of 60bcf in the week ended March 10.
That compares with a withdrawal of 68bcf in the preceding week, 1 billion a year earlier and a five-year average drop of 85bcf. Technically market is getting support at 192.1 and below same could see a test of 188.9 level, And resistance is now likely to be seen at 197.9, a move above could see prices testing 200.5.