Natural Gas Price Fundamental Daily Forecast – Early Trade Suggests Traders Looking for Bullish EIA Report

Natural gas futures are inching higher early Friday despite calls for warmer temperatures over the near-term and strong production. The market is likely being underpinned by worries about starting the winter heating season with a storage deficit.

At 1120 GMT, December Natural Gas is trading $3.293 to $0.032 or +0.96%.

The current short-term range is $3.409 to $3.133. Its mid-point or 50% level is $3.271. The market is straddling this level early Thursday. The fact that the futures contract is even trading there suggests the fundamentals may be balanced with buyers concerned about supply and sellers banking on mild temperatures to hold down demand while production increases.

Short-Term Weather Outlook

NatGasWeather.com for the November 1 to November 7 period says, “Warm high pressure will dominate the eastern and southern U.S. today with highs of 50s to 80s, hottest over the Southeast. A weather system with heavy showers will push through the Midwest and east-central U.S. with rain and snow, and slightly chilly conditions as lows drop into the 20s to 40s. This system will track into the East late Friday to Sunday for a little stronger demand. California and much of the West will be mild to warm. Overall, swings in national demand the next 7-days, averaging out moderate to low.”

Going into today’s U.S. Energy Information Administration’s weekly storage report, national stocks sit at 3.095 Tcf, a deficit of nearly 17%, or 624 Bcf, to the five-year average of 3.719 Tcf.

Forecast

Despite the forecast for warmer temperatures, buyers are coming in to support natural gas because they believe the market is still indecisive about winter demand as storage stocks sit well below the five-year average.

The price action also suggests that traders are going into the EIA report with a lean towards the bullish side. Traders are looking for the EIA report to show a 52 Bcf injection for the week-ended October 26. This is significantly below the five-year average of 62 Bcf.