Natural Gas Price Fundamental Daily Forecast – Counter-Trend Buyers Facing Major Decision at $3.054 to $3.089

Natural gas futures are rebounding early Friday after a bearish government storage report triggered a plunge in prices the previous session. Forecasts calling for cooler temperatures in the Upper Midwest and for light demand this coming weekend also weighed on prices on Thursday.

Natural Gas Intelligence (NGI) said that in addition to weather, liquefied natural gas (LNG) export levels last week retreated from recent highs above 11 Bcf. That downward trend, while thought to reflect maintenance interruptions, extended into this week and curbed the influence of a major catalyst for natural gas prices this spring. LNG feed gas volumes hovered just below 10 Bcf on Thursday, NGI data showed.

At 14:07 GMT, July natural gas futures are trading $3.026, up $0.068 or +2.30%.

Energy Information Administration Weekly Storage Report

Prices fell on Thursday after the EIA reported an injection that exceeded the high end of analysts’ estimates and signaled weaker demand than most had in their models.

The EIA reported an injection of 115 Bcf of natural gas into stockpiles for the week-ended May 21. Ahead of the report, a Bloomberg poll showed a median estimate of 106 Bcf. Predictions ranged from 99 Bcf to 109 Bcf. Reuters guesses ranged from injections of 96 Bcf to 110 Bcf, with a median build of 106 Bcf. The Wall Street Journal survey predicts an average build of 101 Bcf. Estimates ranged from increases of 92 Bcf to 109 Bcf. NGI’s model is calling for a 107 Bcf injection.

The actual number was also greater than the 105 Bcf increase in storage a year earlier and the five-year average injection of 91 Bcf.

The strong injection lifted natural gas inventories to 2,215 Bcf. That compared with the year-earlier level of 2,596 Bcf and the five-year average of 2,278 Bcf.

Daily Outlook

Technically, the main trend is down, but Thursday’s selling pressure was strong enough to take out the week’s low at $2.903 or the short-term support zone at $2.895 to $2.821. This suggests the presence of strong buyers.

The first objective is $3.054 to $3.089. Trader reaction to this zone could determine the near-term direction of the market.

A sustained move under $3.054 will indicate the presence of sellers. If this move creates enough downside momentum then look for the move to complete the 50% to 61.8% retracement into $2.895 to $2.821. Buyers may actually come in on a test of this area.

Overtaking $3.089 will signal the return of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into $3.204 over the short-run.

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