Natural Gas Price Fundamental Daily Forecast – EIA Injection 92 or Higher Should Be Bearish

Natural gas futures are trading lower early Thursday after aggressive speculative buying and short-covering pressed natural gas futures higher on Wednesday. The fundamental data suggests that prices are getting too far too fast.

At 0752 GMT, November Natural Gas is trading $3.258, down $0.026 or -0.79%.

Strong gains in the spot market drove front-month futures higher yesterday. According to reports on Wednesday, the spot market posted another solid gain after Canadian imports became restricted following an explosion on a critical pipeline out of British Columbia.

Natural Gas Intelligence is reporting that Enbridge Inc.’s Westcoast Transmission, near the northern industrial city of Price George, exploded and caught fire late Tuesday, shutting down the province’s main supply from northern fields. Downstream utilities in the United States warned of possible disruptions following the explosion despite no damage to their systems.

Today’s early weakness is likely the net bearish impacts from Hurricane Michael. Furthermore, investors are saying there are now slightly warmer risks in long-range weather models.

Forecast

Despite the early strength, we could see a choppy two-sided trade ahead of today’s U.S. Energy Information Administration’s weekly storage report. Fresh storage data is expected to reflect a build that was closely in line with both the year-ago injection and the five-year average injection. Most estimates are clustered around 85 to 95 Bcf, according to NatGasWeather.com.

Bloomberg has a range of 74 to 96 Bcf, with a median of 92 Bcf. Reuters has a range of 86 to 96 Bcf, with a median build of 91 Bcf. Bespoke Weather Services is at 92 Bcf and EBW Analytics is at 90 Bcf.

If the speculative buying stops and investors shift their focus solely on the EIA report then 92 will be the number to watch. Hitting this number or higher should be considered bearish for the market overall.