Natural Gas Price Fundamental Daily Forecast – EIA Below Expectations; Bulls Eyeing $2.108 for Upside Breakout

Natural gas futures are edging lower on Thursday as the recovery in crude oil prices dampened expectations of lower production. Additionally, investors were shying away from the long side ahead of the latest government storage report.

Coming off a series of bearish misses, the majority of analyst surveyed were predicting a build of about 49 Bcf for the week-ending April 17 in the Energy Information Administration (EIA) report.

At 14:39 GMT, June natural gas is trading $2.027, down $0.026 or -1.27%.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 43 Bcf for the week-ended April 17. That would compare with last year’s 92 Bcf injection and the five-year 49 Bcf build, according to the EIA.

A Bloomberg survey showed estimates ranging from 32 Bcf to 51 Bcf, with a median build of 44 Bcf. A Wall Street Journal poll of 12 analysts saw projections as low as 11 Bcf, though the survey produced an average build of 38 Bcf. A Reuters survey ranged from 11 Bcf to 55 Bcf, with a median injection of 39 Bcf. The Natural Gas Intelligence (NGI) model predicted a build of 51 Bcf.

Total stocks now stand at 2.140 trillion cubic feet (TCF), up 827 Bcf from a year ago, and 364 Bcf above the five-year average, the government report showed.

Short-Term Weather Outlook

According to NatGasWeather, “Weak cool shots will continue across the Great Lakes and Northeast into next week with showers and slightly chilly lows of 20s to lower 40s. The South and Southeast will be warm with highs of 70s and 80s, while the Southwest into the Plains becomes hot with highs of 90s and 100s, hottest in the deserts. A warm weather system will bring showers to the Tennessee Valley today, while a second cooler one tracks into the Northern Rockies. The nation’s hot spot will be the Southwest where highs will reach the 90s to 100s. Overall, moderate national demand.”

Daily Forecast

June natural gas is trading slightly better following the release of the EIA storage report.

Gains are being capped by a main top at $2.108. Taking out this level could trigger an acceleration to the upside with the next major top coming in at $2.279.

The market is currently trading inside a major 50% to 61.8% retracement zone at $2.041 to $1.967. This zone is controlling the longer term direction of the market.

Look for the upside bias to strengthen over $2.041 with a possible breakout over $2.108.

A sustained move under $1.967 will signal the return of sellers. This could drive the market back to $1.902 to $1.856.