Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show Storage Build of 40 Bcf

Natural gas is inching higher on Thursday ahead of the regular session opening and the release of the U.S. Energy Information Administration (EIA) weekly storage report at 14:30 GMT. Yesterday, the market dropped sharply amid concerns over a forecast calling for lower temperatures during the first week of August. Spot prices were mixed with the West higher than the East due to stronger heat-related demand. Essentially, the lack of hot weather has allowed supply to outpace demand, driving prices sharply lower this cooling season.

At 11:30 GMT, September natural gas futures are trading $2.222, up $0.020 or +0.91%.

U.S. Energy Information Administration Weekly Storage Report

A consensus of traders is looking for a storage build of about 40 billion cubic feet (bcf) today. Some are predicting a below-average build in the 30s Bcf for the week-ending July 19.

Bloomberg is estimating a median prediction of 37 Bcf with estimates ranging 31 Bcf to 45 Bcf. The ICE Exchange EIA Financial Weekly Index futures settled Tuesday at 33 Bcf. Natural Gas Intelligence’s model also predicted a 33 Bcf build.

Last year, the EIA recorded a 27 Bcf build for the week-ending July 19, and the five-year average is a 44 Bcf injection.

Short-Term Weather Forecast

According to NatGasWeather for July 24 to July 30, “A cool front with showers and thunderstorms will continue across the southern and eastern US through Friday with highs of only 70s & 80s for light demand. Hot high pressure will rule the West with highs of upper 80s to 100s, hottest over the Southwest into West Texas. Temperatures will warm across the southern US, Midwest, and Mid-Atlantic on Saturday through Wednesday with highs of upper 80s to 90s gaining for a modest bump in national demand. Overall, national demand will be moderate through Saturday then high.”

Daily Forecast

September natural gas is currently trading on the weak side of a key technical area, giving it a downside bias ahead of the EIA report. The resistance area is $2.253 to $2.296. It’s also controlling the short-term direction of the market.

A bearish report will likely drive the market through yesterday’s low at $2.192. This could create the downside momentum needed to eventually challenge the contract low at $2.115.

The market could overcome the first resistance level at $2.253 if the report is surprisingly bullish. Taking out $2.296 and $2.305 will change the main trend to up. This could trigger a near-term short-covering rally.