Colder than expected weather is causing a rally in natural gas futures and may increase demand for heating in the Northeast and Midwest. This comes after warm weather forecasts made natural gas decline two percent in yesterday’s session.
The current change in weather has boosted natural gas futures from Monday’s low of $3.379 per million British thermal units (BTUs). Currently, futures are trading at $3.481 per million BTUs while volumes were almost 45 percent lower than the 100-day moving average.
According to AccuWeather Inc., the low in Boston, Massachusetts will be 36 degrees Fahrenheit, which is 4 degrees lower than usual this time of the year. The Northeast is the largest consuming region for natural gas in the United States. If temperatures remain colder than normal, natural gas could get additional boosts by increased consumption.
Thursday, the Energy Information Administration will report the weekly natural gas storage report.
Price action is still trading below the 50 and 200 EMA on the 4H chart, and that still indicates a short-term bearish sentiment. Price is also currently holding under support turned resistance at $3.489 per million BTUs and just under the 20 EMA.