Nat Gas Prices Firm Ahead of Weekly EIA Storage Report

Natural gas futures prices spiked on Thursday after Russian forces launched an invasion of Ukraine. Russian forces fired missiles at several cities in Ukraine and landed troops on its coast on Thursday, officials and media said, after President Vladimir Putin authorized what he called a special military operation in the east.

At 14:07 GMT, April natural gas futures are trading $4.910, up 0.317 or +6.90%.

Traders are also preparing for the release of the U.S. government’s weekly storage report at 15:30 GMT as well as weather related factors but the news coming out of Europe is overshadowing these other factors.

“Price action right now in all markets is being driven almost solely by the escalating situation revolving around the Russia/Ukraine conflict,” Bespoke said.” …The timing just happens to fall on the day of the March contract’s expiration, as well, and it is impossible to say which way it moves today, in our view.

“For what it’s worth, production slid below 93 Bcf/d this morning with some late-season freeze-offs, but this should be brief,” the firm added.

Energy Information Administration Weekly Storage Report

Although the Russian invasion of Ukraine is dominating the headlines on Thursday, there is a weekly government storage report. The weekly EIA storage report is expected to show a withdrawal around 133-140 Bcf.

Natural Gas Intelligence (NGI) is reporting that a Reuters poll of 16 analysts estimated withdrawals of 112 Bcf to 199 Bcf, with a median estimate of 133 Bcf. Estimates submitted to a Wall Street Journal poll ranged from withdrawals of 114 Bcf to 199 Bcf, with an average estimate of minus 140 Bcf. The median of 13 estimates submitted to Bloomberg as of Wednesday, meanwhile, was a withdrawal of 126 Bcf. Responses to Bloomberg ranged from minus 116 Bcf to minus 149 Bcf.

NGI modeled a 121 Bcf draw for the report, which covers the week ending February 18. The EIA recorded a 324 Bcf withdrawal for the year-earlier period, while the five-year average is a 166 Bcf draw.

Short-Term Outlook

Natural gas prices are likely to remain elevated as traders assess the impact of the war in Ukraine on demand for U.S. liquefied natural gas, which is quite high at this time. Essentially, we’re dealing with the prospect of significant energy market disruptions over the near-term, given Europe’s strong reliance on Russian natural gas supplies.

Technically, the first upside target for buyers is $5.053. Overtaking this level could trigger an acceleration into $5.518. This is also a trigger point for another acceleration with $6.412 the next major target.