Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show First Storage Withdrawal of Season

Natural gas futures continue to consolidate around the $5.024 technical level as traders await the release of the government’s weekly storage report at 17:00 GMT. The report is being released a day early because of Thursday’s U.S. Thanksgiving holiday. Meanwhile, prices continue to be capped by forecasts calling for warmer temperatures over the near-term. At the same time, the market appears to be supported by speculators betting on the eventual return of colder winter temperatures.

At 11:57 GMT, January natural gas futures are trading $5.031, down $0.004 or -0.08%.

Also supporting the market are expectations of robust demand from Europe for U.S. exports of liquefied natural gas (LNG) through winter.

Traders Shift Attention to European Supply Woes

LNG feed gas volumes hovered close to 2021 highs above 11 Bcf Tuesday, as U.S. export destinations in Asia and especially Europe called for added supplies for the winter months, Natural Gas Intelligence (NGI) reported.

“The natural gas markets have been seeking any bullish news/trends to give reason to spike prices higher, and today bulls were given new reasons on U.S. sanctions,” NatGasWeather said on Tuesday after the United States imposed new sanctions on Russia’s recently completed but still inactive Nord Stream 2 (NS2) pipeline.

Short-Term Weather Outlook

Model runs on Tuesday led Bespoke Weather Services to add gas-weighted degree days (GWDD) to its updated 15-day projections versus previous expectations. However, the outlook for strong heating demand in early December remained dubious.

The European model showed a “more drastic colder change” from the American model, “which added about a dozen GWDD compared to its outlook” from Monday afternoon, Bespoke said.

Even with the colder change, the European model continued to advertise warmer than normal conditions for the 11- and 15-day period, Bespoke said.

“We feel it is at risk of reverting closer” to the American modeling in subsequent runs, “as we do still favor a warmer lean into early December,” the firm added.

US Energy Information Administration Weekly Storage Report

Ahead of today’s EIA storage report, NGI’s model predicted a 26 Bcf withdrawal from stockpiles, which would mark the season’s first net pull on Lower 48 inventories.

NGI is also reporting a Reuters poll found estimates that ranged from withdrawals of 16 Bcf to 31 Bcf, with a median of 22 Bcf. Early results of a Bloomberg survey ranged from pulls of 22 Bcf to 26 Bcf, creating a median of 24 Bcf. The Wall Street Journal’s poll found withdrawal estimates of 11 Bcf to 25 Bcf, with an average of 20 Bcf.

Last year, the EIA recorded an 11 Bcf pull for the similar week, and the five-year average is a 44 Bcf withdrawal.

Short-Term Outlook

The main range is $4.009 to $6.667. The market is currently trading on the weak side of its retracement zone at $5.024 to $5.338, making it resistance.

The market is also straddling the lower level of this range at $5.024. Trader reaction to this level will determine the direction of this level on Wednesday.

Look for an upside bias to develop on a sustained move over $5.024 with the first upside target $5.018, followed by $5.338.

The downside bias will resume on a sustained move under $5.024. This could lead to a retest of the weekly low at $4.736. This is a potential trigger point for an acceleration to the downside.