Natural Gas Price Fundamental Daily Forecast – EIA Build Expected to Exceed 5-Year Average

Natural gas futures are up over 4.5% on Thursday shortly before the release of the weekly U.S. government storage report. The market is being supported by a drop in daily output and new forecasts calling for higher demand this week than previously expected.

At 13:11 GMT, August natural gas futures are trading $5.808, up $0.298 or +5.41%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $18.84, up $0.18 or +0.96%.

Refinitiv Daily Production/Demand Outlook

Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 95.9 bcfd so far in July from 95.1 in June. That compares with a monthly record of 96.1 bcfd in December 2021.

Over the past two days, however, output was on track to drop 2.4 bcfd to a preliminary three-week low of 94.2 bcfd on Thursday.

Additionally, with hotter weather coming, Refinitiv projected average U.S. gas demand including exports would rise from 96.2 bcfd this week to 99.0 bcfd next week.

Energy Information Administration Weekly Storage Report

Traders are expecting the EIA to report that utilities added more gas to storage last week than usual despite hotter than normal weather when it releases its weekly report at 14:30 GMT. The expected build is being attributed to the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas.

Analysts forecast U.S. utilities added 74 billion cubic feet (bcf) of gas to storage during the week-ended July 1. That compares with an increase of 25 bcf in the same week last year and a five-year average increase of 60 bcf.

If correct, last week’s increase would boost stockpiles to 2.325 trillion cubic feet (tcf), or the five-year average of 2.633 tcf for this time of the year.

Natural Gas Intelligence (NGI) is reporting that a Reuters’ survey is showing injection estimates that spanned 68 Bcf to 84 Bcf, with a median of 75 Bcf. Results of Bloomberg’s poll showed a median injection estimate of 75 Bcf. Predictions stretched from 70 Bcf at the low end to 85 Bcf at the high mark. A Wall Street Journal poll found an average injection expectation of 76 Bcf, with a range of 70 Bcf to 84 Bcf.

Short-Term Outlook

The daily chart pattern suggests traders are trying to build a support base between the long-term Fibonacci level at $5.865 and the March 30 main bottom at $5.385.

A sustained move over $5.865 will indicate the short-covering is getting stronger, while overcoming a minor pivot at $6.079 could trigger an acceleration into the long-term 50% level at $6.587.

A sustained move under $5.385 will be a sign of weakness. This could trigger the start of an acceleration into the March 9 main bottom at $4.610.