Natural Gas Price Fundamental Daily Forecast – After EIA Report, Weather Will Become Issue

Natural gas futures are under pressure early Thursday, shortly ahead of today’s U.S. Energy Information Administration’s weekly storage report.

At 1045 GMT, April Natural Gas futures are trading $2.597, down $0.033 or -1.25%.

This week’s U.S. Energy Information Administration’s weekly storage report is expected to show a draw of about 180 billion cubic feet (bcf) in the week ended February 9.

That compares with a decline of 119 bcf in the preceding week, a fall of 114 bcf a year earlier and a five-year average drop of 154 bcf.

Total natural gas in storage currently stands at 2.078 trillion cubic feet (tcf), according to the EIA.

That figure is 503 bcf, or around 19.4%, lower than levels at this time a year ago and 393 bcf, or roughly 15.9%, below the five-year average for this time of year.

Forecast

This week’s EIA report could cause a two-sided response in the markets due to oversold technical conditions. The number could be bearish, but the response positive, because it has already been priced into the market.

After the report, traders are likely to shift their focus back to the weather. According to the latest forecasts, demand this week will swing between moderate and high several times into this weekend. This may also be enough to trigger a two-sided move.

Today’s early price action indicates downside momentum is building into the report. This may be enough to drive prices through this week’s low at $2.565.

If the selling pressure is strong enough, we may see an attempt to test the December 21 bottom at $2.487.

Any hesitation in the selling pressure, could trigger a short-covering rally. Perhaps fueling this rally will be technically oversold conditions.