Natural Gas Price Fundamental Daily Forecast – EIA Report Estimates Jump to Triple Digits

Natural gas prices stabilized on Wednesday after a steep weather-related sell-off the previous session. The price action suggests traders are content with the reaction to the news that temperatures will return to near-normal next week.

July Natural Gas futures settled at $2.885, down $0.018 or -0.62%.

Natgasweather.com is saying, “This weekend into early next week will bring areas of showers across the northern U.S. with highs of 70s and 80s, while very warm to hot over Texas, the South, and SW.” This is likely to weigh on demand.

Forecast

Traders are going into today’s U.S. Energy Information Administration (EIA) weekly storage report a little nervous. This is because the pre-report estimates have moved from a consensus injection of about 97 Bcf to triple digits.

A Reuters survey of traders and analysts on average predicted a 102 Bcf injection for the week-ending May 25, with responses ranging from 88 Bcf to 107 Bcf. A Bloomberg survey produced a median 102 Bcf injection, with responses from 96 Bcf to 107 Bcf.

Additionally, The Desk’s Early View natural gas survey showed respondents on average anticipating a 102.3 Bcf build from this week’s EIA report, with a median of 101 Bcf. ION Energy called for a 105 Bcf build, while Price Futures Group estimated a build of 101 Bcf. The Intercontinental Exchange EIA Financial Weekly Index settled Tuesday at an injection of 100 Bcf for Thursday’s report.

Looking ahead, we could see a 90-plus Bcf injection for the current week ending June 1. Some are saying that for the weeks ending June 8 and June 15, the injection rate could drop as low as 80 Bcf.

Last week, the EIA data showed a build of 91 Bcf, an increase in 81 Bcf a year earlier and a five-year average rise of 97 Bcf.

Total natural gas in storage currently stands at 1.629 trillion cubic feet (Tcf), according to the EIA. That figure is 804 Bcf, or around 33.0%, lower than levels at this time a year ago, and 499 Bcf, or roughly 23.4%, below the five-year average for this time of year.

The longer-term picture looks bullish because of worries about stronger cooling demand while there remains a storage deficit. Short-term, however, traders are watching next week’s weather forecast and it looks neutral to bearish at this time.

Prices will rebound quickly if the weather guys put heat back into the forecast. Until then, price could drift sideways to lower until they reach an attractive price level. A big miss in the EIA report could also trigger a breakout over $3.010 with $3.043 the near-term target.

A larger than expected build could trigger a break into $2.858 then $2.826.