Natural Gas Price Fundamental Daily Forecast – Attempting to Form Short-term Bottom

Natural gas futures posted a wide range on Thursday but at the end of the session, finished nearly flat. The volatile price action was fueled by the weekly storage report from the government and the latest weather forecast.

On Thursday, July Natural Gas futures closed at $3.028, up $0.10 or 0.33%. Early Friday, the market was trading $3.047, up $0.018 or +0.59%.

The U.S. Energy Information Administration (EIA) said utilities added 106 Bcf of gas to storage during the week-ended June 2. Analysts were looking for a build of 98 Bcf.

Inventories are now up about 10 percent above normal for this time of year. The new build compares with an increase of 68 Bcf during the same week a year earlier and a five-year average build of 94 Bcf for the period.

Forecast

The daily chart pattern suggests the market may be trying to form a support base inside the $2.935 to $3.095. The key area that is likely to determine the near-term direction of the market is $3.015 to $2.996.

Holding above $3.015 will indicate the presence of buyers. This could generate enough upside momentum to challenge $3.095 then $3.124.

A break below $2.996 will signal the presence of sellers with the first target $2.935, followed by $2.888.

In other news, meteorologists forecast this summer will be slightly warmer than normal, but not quite as hot as last year, likely prompting power generators to burn a little more gas than usual to meet air conditioning demand, though less than 2016.

Additionally, analysts are forecasting gas inventories will rise by only 1.6 trillion cubic feet (tcf) during the April-October injection season due to relatively low output so far in 2017 and mounting sales abroad.

Translation: We’re likely to see a summer rally when the heat returns, but gains will be limited.