On Thursday, natural gas prices rose slightly higher after the release of the inventory data. Natural gas prices in the United Kingdom slid in the final week of winter. The upward trading trajectory for natural gas remains strong.

That should be pivotal for a potential upswing in price. The contract price for natural gas for April delivery on the New York Mercantile Exchange was up by 0.17% to 3.02 MMBtu.

Inventory Data

The Energy Information Administration — EIA — released natural gas inventory data on Thursday. It had reported that there was a drawdown of 150 Bcf in stockpiles for the week ending March 17. That number was good for two reasons.

The first being that analysts’ were predicting that there would be a drawdown by 150 Bcf. It surely didn’t beat expectations, but it came in line which was still bullish for natural gas prices.

The second reason why the number was good is because of a drawdown in stockpiles. In order for the price of natural gas to trade higher, there has to be a drawdown in stockpiles. That is because natural gas trades based on supply and demand. A smaller amount of stockpiles occurs for one particular reason.

That reason is a large increase in demand. The next report will be due out on the coming Thursday. As long as the drawdown remains in place, the price of natural gas should have no problem trading higher.

U.K. Natural Gas Prices Lower

The time is approaching for the final week of the winter season. Bearish traders have benefited from the decline in prices in the U.K ICE exchange. The biggest issue deals with warmer to mild weather coming intoplay. Warmer weather brings a huge dip in demand.

The front-month contract for the price of natural gas on the ICE exchange is set for the seventh-week drop in a row.

The main issue is that natural gas prices are highly affected by the weather. When the weather is warmer, demand drops immensely. On the flip side, when there is colder weather demand picks up again.

The reason that demand picks up so much during the winter is because of an increase in use of heaters. Considering that most heaters are powered by natural gas, demand starts to rise.

There was another reason why the U.K. natural gas price was lower. That has to do with the excessive amount of additional supply stemming from Norway. That Norway hub is the U.K.’s biggest foreign supplier. There was a huge increase of liquid natural gas — LNF — being shipped back to Norway. The excess in supply was a huge burden for the price on the ICE exchange.

What Binary Options Traders Should Watch For

Traders should watch a few things.

The first of which is to monitor the next inventory data that is set to be released this coming Thursday. Another drawdown in U.S. inventory should be bullish for the price of natural gas. Especially since this past week saw a drawdown in stockpiles by such a large amount.

The second item would be U.K. inventory data. Considering that a lot of supply was shipped back to Norway, that could mean a lot of pressure for the price of natural gas on the ICE exchange.

The final item that traders should keep an eye on would be the end of the winter season. Winter is expected to end on April 1. That means that warmer weather could bring a surge in stockpiles. If that happens then the price of natural gas will have a hard time breaking through the March highs of 3.10 MMBtu.