Natural Gas Price Fundamental Daily Forecast – EIA Expected to Report 55 Bcf Injection

Natural gas futures are trading nearly flat on Thursday, shortly before the release of the latest government storage report. Prices fell the previous session with output on track to hit a monthly record high. A plunge in oil and gasoline prices also led to spillover selling in natural gas.

At 12:29 GMT, October natural gas futures are trading $7.832, down $0.010 or -0.13%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $27.00, down $0.80 or -2.88%.

According to Natural Gas Intelligence (NGI), “Natural gas prices dropped again Wednesday as traders assessed receding domestic demand prospects, rising production and possible peril for American LNG exports.”

Receding Domestic Demand Prospects

NatGasWeather analysts attributed “strong selling” in large part to cooler temperature trends and robust production. Additionally, with cooler weather coming, data provider Refinitiv projected average U.S. gas demand would slide from 97.0 bcfd this week to 92.8 bcfd next week.

Production Rising

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.2 bcfd so far in September from a record 98.0 bcfd in August. Additionally, U.S. production, meanwhile, hovered near 100 Bcf on Wednesday, according to Bloomberg’s estimate, putting output around an all-time high.

Bears Helped by LNG Ruling

NGI reported that EBW Analytics Group analyst Eli Rubin said, an Environmental Protection Agency (EPA) decision against waiving an emissions limit requirement for turbines at Cheniere Energy Inc.’s liquefied natural gas facilities further empowered bears.

The affected Cheniere operations at Sabine Pass and Corpus Christi currently account for more than half of U.S. LNG exports, “and any disruption could create chaos for U.S. and global natural gas markets,” Rubin said Wednesday.

Energy Information Administration Weekly Storage Report

Today’s EIA weekly storage report, due to be released at 14:30 GMT, is expected to show a 55 Bcf injection for the week-ending September 2.

NGI is reporting that “results of Bloomberg’s survey showed a median injection projection of 56 Bcf, with estimates ranging from 47 Bcf to 66 Bcf. A Reuters poll produced injection estimates that spanned 47 Bcf to 59 Bcf. It landed at a median of 54 Bcf. A Wall Street Journal tally found an average injection expectation of 56 Bcf, with a low estimate of 47 Bcf and a high of 66 Bcf.”

In the comparable week last year, the EIA printed an injection of 48 Bcf, while the five-year average injection is 65 Bcf.

Daily Forecast

Technically speaking, the next potential support is $7.669 to $7.121. To some, this area represents value so we could see buyers on the first test of this zone. This could trigger a meaningful technical bounce.

However, if $7.121 fails as support, we could see an acceleration to the downside with $5.350 the next major downside target.

Fundamentally, the potentially bearish wildcard is a U.S. LNG export disruption because of the Biden administration’s EPA ruling against Cheniere.