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Natural Gas News: Prices Edge Higher as Traders Eye Bullish EIA Report

By:
James Hyerczyk
Published: Aug 15, 2024, 12:19 GMT+00:00

Key Points:

  • Natural gas futures rise as traders await a crucial EIA storage report, eyeing a potential bullish market shift.
  • EIA storage estimates range from 0 to 9 Bcf, with some predicting a rare midsummer draw that could tighten balances.
  • Market sentiment turns bullish as money managers increase net long positions, anticipating stronger cooling demand.
  • Key technical level at $2.315 could trigger an acceleration toward $2.461 if the bullish outlook continues.
  • High-pressure systems boost natural gas demand across major U.S. regions, driving the market's bullish momentum.
Natural Gas News

In this article:

Natural Gas Futures Rise as Traders Eye Crucial EIA Storage Data

U.S. natural gas futures are gaining momentum as traders anticipate the Energy Information Administration’s (EIA) weekly storage report, which is set to be released today at 14:30 GMT. Market expectations of increased demand are providing additional support, with prices nearing a significant technical level. The July 22 main top at $2.315 is in focus, potentially triggering an acceleration towards the 50-day moving average of $2.461.

At 12:06 GMT, Natural Gas Futures are trading $2.231, up $0.012 or +0.54%.

Bullish Sentiment Gains Traction Amid Storage Draw Expectations

On Wednesday, natural gas futures rebounded after a brief period of weakness, driven by expectations of a bullish storage report. The possibility of a rare midsummer storage draw has heightened market activity, indicating tightening market balances. This optimism is reflected in the recent rally, supported by a surge in bullish sentiment among money managers, who have increased their net long positions to a six-week high. The unwinding of short positions and forecasts for rising cooling demand across the Lower 48 states have drawn new buyers into the market.

Anticipated EIA Report Could Signal Market Tightening

Today’s EIA report is pivotal, with a wide range of survey estimates predicting a storage change between 0 and 9 Bcf, with most analysts leaning towards a minimal build of 0-1 Bcf. However, some forecasts suggest a potential draw of -1 Bcf, which would reduce the current surplus from +423 Bcf to approximately +380 Bcf. This expected draw is attributed to higher cooling degree days (CDDs) and lower wind energy generation, which has boosted natural gas demand, according to NatGasWeather.

Hot Weather Across Key Regions Set to Drive Strong Demand

The weather remains a critical factor, with forecasts from NatGasWeather indicating strong demand through the weekend. High-pressure systems across the western, central, and southern U.S. are expected to maintain temperatures in the upper 80s to 100s, driving significant demand. Meanwhile, the Midwest, Ohio Valley, Great Lakes, and Northeast will experience lighter demand due to cooler weather systems.

Bullish Momentum Builds: Are Prices Set for a Breakout?

The current market conditions suggest a bullish outlook for U.S. natural gas futures. The combination of anticipated strong demand, potential storage draws, and bullish trader sentiment is likely to drive prices higher in the near term. If the EIA report confirms a storage draw, it could further support an upward trend, with the next technical target at $2.461.

Technical Analysis

Daily Natural Gas

Natural gas futures are edging higher on Thursday after establishing support at $2.149. A sustained move over this level could create the momentum needed to challenge the next main top at $2.315. This is a potential trigger point for an acceleration into the 50-day moving average at $2.461.

On the flipside, if $2.149 fails as support, prices could collapse into a short-term pivot at $2.079 over the near-term.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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