In an EBW Analytics Group report sent to Rigzone on Tuesday by the EBW Analytics Group team, Eli Rubin, an energy analyst at the company, said natural gas bulls are attempting to “hold the line” ahead of the April contract rollover.
“The April natural gas contract tested support in the mid-to-high $3.80s Sunday and Monday evenings, but bullish call option holders are attempting to maintain support at the $4.00 strike price ahead of contract options expiration tomorrow,” Rubin noted in the report.
“Strengthening weather runs and Henry Hub spot prices rebounding to $4.03 may reinforce support,” Rubin added.
In the report, Rubin said strong daily heating demand tomorrow and early next week could provide further price support.
“Sizable weekly injections are possible in early April, though, with mild spring weather helping to rapidly erode outstanding storage deficits over the next month,” Rubin warned.
“In the immediate term, price action will be a function of trader positioning through April contract options expiration tomorrow and final settlement on Thursday,” Rubin added.
“While technical support appears staunch, we retain a modest bearish bias over the next 7-10 days as May becomes the NYMEX front-month and bearish spring fundamentals roll forward,” Rubin continued.
In a separate EBW Analytics Group report sent to Rigzone on Monday by the EBW Analytics Group team, Rubin said the April natural gas contract tested both support and resistance on Friday before closing within a penny of Thursday’s sub-$4.00 per million British thermal unit (MMBtu) close.
“Despite sinking last night [Sunday] due to a warmer weekend weather shift, though, initial support is holding firm this morning,” Rubin noted in that report.
“DTN’s mild weekend weather shift is far larger than forecast by other meteorologists. Still, the outlook amplifies near-term downside price risks as a mild spring envelops the country into early April,” Rubin added.
“Huge seasonal injections are possible with gas production at spring record highs, no heating or cooling demand, and power burns soft due to high renewables and prices incentivizing gas-to-coal switching,” Rubin continued.
“Near-term natural gas pricing may be a function of trader positioning around April options expiry and final settlement. While risks lie to the downside, traders attempting to sustain $4.00 into options expiration cannot be ruled out,” Rubin went on to state.
In a BMI report sent to Rigzone by the Fitch Group on Friday, analysts at BMI highlighted that, “in the U.S., Henry Hub prices have held above $4 per MMBtu for the past three weeks alongside record LNG exports”.
“This is in line with our bullish view of U.S. gas prices overall for the year (which we forecast to average to $3.4 per MMBtu in 2025 from $2.4 per MMBtu in 2024),” the analysts added.
That BMI report showed that BMI expects the front month natural gas Henry Hub price to average $3.40 per MMBtu in 2025 and $3.80 per MMBtu in 2026.
A BofA Global Research report sent to Rigzone on March 19 by the BofA Global Research team noted that Henry Hub gas prices “spent most of 2024 digging out of the hole created by a warm winter and excess supply growth, averaging ~$2.40 per MMBtu”.
“The market finally turned the corner in December as the Plaquemines LNG terminal started and colder weather crept into the forecast, quickly pushing gas above $4 by year-end,” the report added.
“As winter progressed, several cold blasts chipped away at the surplus and lowered end of season storage estimates. By early March, storage sat 230 billion cubic feet below the five-year average, down ~900 billion cubic feet year on year, and now looks set to exit March <1.7 trillion cubic feet,” they continued.
“Prices responded to the rapid tightening, hitting a high of $4.90 last week, while the curve flipped to backwardation,” BofA Global Research went on to state.
In that report, BofA Global Research revealed that its Henry Hub price forecast was $4.64 per MMBtu in 2025 and $4.50 per MMBtu in 2026.
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