Natural Gas Price Fundamental Daily Forecast – EIA Data Supportive, but Next Surge Depends on Hurricane Impact

Natural gas futures are trading higher on Friday, boosted by the surprisingly bullish government storage report, a rebound in liquefied natural gas (LNG) demand and hurricane fears. Natural gas futures surged on the events into a multi-month high.

At 11:11 GMT, October natural gas futures are trading $4.233, up $0.022 or +0.52%.

Weekly US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration reported on Thursday that domestic supplies of natural gas rose by 29 billion cubic feet (Bcf) for the week-ended August 20. On average, analysts forecast a larger increase of 37 Bcf, according to a poll conducted by S&P Global Platts.

Total stocks now stand at 2.851 Trillion cubic feet, down 563 Bcf from a year ago and 189 Bcf below the five-year average, the government said.

Bespoke Weather Services said the EIA’s 29 Bcf figure “reflects, once again, very tight supply/demand balances.” The firm had seen some risk of a lower number, but it struggled to explain the miss, according to Natural Gas Intelligence (NGI).

“Perhaps there was a small make-up for what was a strong outlier to the other side last week,” Bespoke analyst Brian Lovern said. “Obviously, if Thursday’s numbers were to be truly representative, the sky is the limit for prices. But, we suspect next week’s number is back somewhat looser, though nothing like the balances reflected in last week’s 42 Bcf build.”

LNG Gas Volumes Rise

On Thursday, Liquefied Natural Gas (LNG) feed gas volumes were back near 11 Bcf, up from around 10.4 Bcf on Wednesday, NGI reported.

Hurricane Activity Picking Up

Hurricane Ida is currently forecast to move over the southeastern and central Gulf of Mexico (GOM). The system was expected to approach the northern Gulf coast on Sunday. It is expected to continue to strengthen over the warm GOM waters when it approaches the northern Gulf Coast.

Although the storm on the current track is forecast to miss the Sabine Pass and Cameron LNG facilities, there was some concern of local flooding at natural gas facilities. There’s also the risk that the storm may change direction before it comes ashore.

Daily Forecast

Prices spiked on Thursday, but are only edging higher early Friday. This move may be reflecting doubts in the EIA report and uncertainty over the path of the hurricane. Prices could fluctuate all session on Friday until these important details are worked out.