Natural Gas Price Fundamental Daily Forecast – Bearish Monthly EIA Report Could Crush Prices

Natural gas futures are trading lower early Friday after posting a volatile two-sided trade on Thursday in reaction to weekly government data.

At 0924 GMT, August Natural Gas is trading $2.928, down $0.012 or -0.41%.

On Thursday, the U.S. Energy Information Administration said that domestic supplies of natural gas rose by 66 billion cubic feet for the week-ended June 22. Traders were looking for an increase of 71 billion cubic feet.

The data, however, included an upward revision for the week-ending June 15. The previously reported figure was 91 Bcf. The revised figure was 95 Bcf.

Total stocks now stand at 2.074 trillion cubic feet, down 735 billion cubic feet from a year ago, and 501 billion below the five-year average, the government said.

Further details of the EIA report revealed a net 66 Bcf injection into Lower 48 gas stocks for the period, on the weak side of market expectations ahead of the report. Last year, the EIA recorded a 48 Bcf injection, and the five-year average is a build of 72 Bcf.

Forecast

The EIA reported a below-consensus on Thursday, which was bullish, but the upward revision from the previous week stopped the rally and turned the market lower for the session.

On Friday, the EIA will release its monthly production report. If it shows rapidly growing production then look out to the downside.

According to NatGasWeather.com, the weather should be supportive for prices, but rising production could neutralize its impact.

For June 28 to July 4, “Hot high pressure will strengthen across the Midwest and East today into early next week with highs of 90s gaining ground. The southern U.S. will be hot with 90s and 100s, while the West also hot other than the more comfortable northwest and into California the next few days. With much of the country east of the Rockies becoming hot with 90s to 100s late this week into next, demand will be high then very high early next week.”

If the EIA’s monthly production report is bearish then look for a spike into the series of bottoms at $2.896, $2.891 and $2.883. Additionally, there is a major technical support zone at $2.885 to $2.848. If this zone fails as support then chances for a summer rally will be greatly reduced.