Natural Gas Price Fundamental Daily Forecast – Bullish Factors Help Shift Momentum with $2.685 Next Target

Natural gas prices are trading higher on Friday on short-covering and some like speculative buying as traders react to a potentially bullish combination of better-than-expected storage withdrawal, cooler-trending forecasts and continuing strong export demand. A sustained drop in production is also helping to underpin prices, while shaking out some of the weaker short-sellers.

At 13:19 GMT, January natural gas is trading $2.586, up $0.033 or +1.29%.

US Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that working gas storage in the contiguous United States was 3,848 billion cubic feet in the week ending December 4, a net decrease of 91 billion cubic feet, or 2.3 percent, from the previous week.

The total working gas storage increased 8.7 percent from this time last year, or 7.2 percent above the five-year average, according to the EIA’s Weekly Natural Gas Storage Report.

Ahead of the report, Natural Gas Intelligence (NGI) reported a Bloomberg survey of six analysts had withdrawal estimates ranging from 84 Bcf to 99 Bcf, with a median draw of 86 Bcf. A Wall Street Journal poll of 14 market participants showed a withdrawal as low as 82 Bcf, with an 89 Bcf average. Reuters’ survey produced even lower estimates, down to a draw of 70 Bcf, while NGI projected an 84 Bcf pull.

Last year, the Energy Information Administration (EIA) recorded a 57 Bcf pull from storage inventories in the similar week, while the five-year average stands at 61 Bcf. A meager 1 Bcf was reported last week by the EIA.

Short-Term Weather Outlook

According to NatGasWeather for December 11 to December 17, “The eastern half of the US will be warmer than normal this weekend into next week with highs of 40s to 70s for light national demand. The western and central US will be mild to slightly cool through the weekend as weather systems bring rain and snow with highs of 30s to 60s. Cooler air will spread across the northern and eastern U.S. early and mid-next week with lows of 10s to 30s for a modest bump in national demand. Overall, national demand will be low through the weekend, then increasing to moderate-high early next week.”

Daily Forecast

Production levels have dropped and exports are rising, helping to underpin prices, while the latest weather models are providing reasons to remain optimistic about firm to higher prices over the short-run. However, keep in mind these are not game changing events and that the longer-term outlook is still bearish.

Technically, the minor trend turned up on the daily chart on Thursday, shifting momentum to the upside. If this creates enough upside momentum then look for a possible drive into a 50% to 61.8% retracement zone at $2.685 to $2.760.

Since the main trend is down, sellers could return following a test of this area.

For a look at all of today’s economic events, check out our economic calendar.