Natural Gas Price Fundamental Daily Forecast – COVID-19 Concerns Raise Demand Destruction, Containment Fears

Natural gas futures are trading lower on Friday, testing their lowest level since August 13 on renewed fears of demand destruction after President Trump’s positive COVID-19 test thrust the coronavirus pandemic back to the forefront, crushing ideas that an economic recovery was well on its way.

Meanwhile, traders continued to react to yesterday’s large storage build that fueled another sell-off. Weather-driven demand concerns, flat liquefied natural gas (LNG) levels, and worries over containment are also encouraging long traders to liquidate positions and aggressive short-sellers to press prices lower.

At 11:08 GMT, December natural gas futures are trading $2.992, down $0.070 or -2.29%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 76 billion cubic feet (Bcf) for the week-ended September 25. This was in line with the forecast.

Total stocks now stand at 3.756 trillion cubic feet (Tcf), up 471 billion cubic feet from a year ago, and 405 billion cubic feet above the five-year average, the government said.

A Bloomberg survey found estimates ranging from 75 Bcf to 86 Bcf, with a median of 78 Bcf, while a Reuters poll found estimates ranging from 74 Bcf to 92 Bcf and a median of 76 Bcf.

A Wall Street Journal survey found estimates from 73 Bcf to 92 Bcf and an average of 80 Bcf. NGI estimated an injection of 80 Bcf. That compares with a 109 Bcf increase in the comparable week last year and a five-year average rise of 78 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for October 1 to October 7, “The West will be very warm to hot with highs of 80s and 90s, locally 100s over California and the Southwest. An early season cold shot will sweep across the Great Lakes and East the next several days with chilly lows of 30s & 40s, locally 20s, for stronger demand. However, warmer conditions will return next week with highs of 60s to 80s gaining in coverage. Overall, national demand will be moderate to high the next several days, then lighter next week.”

Daily Forecast

The fundamentals suggest the tone of the market will be dovish on Friday, but technically, we could see a counter-trend bounce if traders show respect for the retracement zone at $3.014 to $2.929.

President Trump’s positive COVID-19 test is raising fears that the pandemic will get worse before it gets better and that can’t be good for the demand outlook.

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