Natural Gas Price Fundamental Daily Forecast – EIA Report May Show Bigger-Than-Usual 87 BCF Build

Natural gas prices retreated on Wednesday amid concerns over production increases and forecasts for less cooling demand next week.

November natural gas futures settled at $3.141, down 0.034 or -1.07%.

According to Thomson Reuters, U.S. gas consumption is expected to slide to 71.7 billion cubic feet per day next week from 72.5 bcfd this week.

The expected gas use over the next two weeks, however, was up from 67.7 bcfd seen last week when Hurricane Irma knocked out power to millions in the U.S. Southeast and brought cooler, wetter weather to much of the eastern half of the country. As of Wednesday morning, there were still about 84,000 customers without power in Florida.

Additionally, production in the lower 48 U.S. states rose to an average 73.4 bcfd over the past 30 days, up from 71.2 bcfd a year earlier. However, this was far short of the 74.4 bcfd during the same period in 2015, when output was at a record high.

Reuters also said U.S. exports were expected to average 8.6 bcfd this week, up 65 percent from a year earlier.

Forecast

Utilities likely added a bigger-than-usual 87 billion cubic feet of gas into storage during the week-ended September 15, which would boost inventories to more than 2 percent above normal for this time of the year.

This compares with a 54 bcf increase during the same week a year ago and a five-year average rise of 73 bcf for that period.

Natgasweather.com is saying that from September 21 to September 25, “High pressure will dominate the southern and east-central U.S. through early next week with highs of 80s and 90s. Much of the West will be cool, aided by a rather chilly fall-like weather system arriving this weekend with valley rains and mountain snows.”

“Tropical system Jose is expected to provide a glancing blow of showers and cooling mid-week to the NE Coast.”

“Overall, national natural gas demand will be moderate to high through next week.”

Hurricane Maria is still churning out in the Atlantic with impressive strength after “destroying” Puerto Rico. It is expected to turn north, thereby, sparing Florida from a direct hit. The sell-off the last two days may be related to speculative longs selling out of bets they place on Maria hitting Florida.

The current chart pattern indicates sellers have successfully defended a key retracement zone once again at $3.224 to $3.303.

If the downside momentum continues then we’re likely to see a break into the short-term resistance zone at $3.086 to $3.055.