Natural Gas Price Fundamental Daily Forecast – EIA Report Guesses are Wide-Ranging with Consensus at 28 Bcf

Natural gas futures are trading lower on Thursday shortly before the release of the U.S. weekly storage report. Looking ahead to Thursday’s report, estimates are wide ranging. This could be because wind generation was strong at the beginning of the reference week. However, it then tapered off toward the end of the period, as liquefied natural gas (LNG) demand started to recover from prior lows, Natural Gas Intelligence (NGI) reported.

At 13:05 GMT, October natural gas is trading $3.791, down $0.075 or -1.94%.

Cooler weather forecasts are also weighing on prices. Recent weather models have provided little bullish news for natural gas traders.

Although heat could return this weekend to the eastern two-thirds of the country, none of the experts are calling for record temperatures that could spike demand higher.

NatGasWeather said long-range models have become increasingly bearish for the late August/early September period as the upper ridge weakens. Rather than keep the hot pattern intact, this weakening instead would bring “perfect” daytime temperatures in the 70s and 80s across the northern United States. Even the normally sweltering South would likely see less coverage of 90s and 100s, the forecaster said.

Energy Information Administration Weekly Storage Report

Last week, the Energy Information Administration (EIA) said stocks as of August 13 were at 2,776 Bcf, which is about 17% below year-ago levels and 6% below the five-year average.

Natural Gas Intelligence (NGI) is reporting that ahead of the EIA report, scheduled for 14:30 GMT, a Wall Street Journal poll of 14 analysts produced a range from a 9 Bcf injection to a 33 Bcf injection, with an average of 28 Bcf.

Bloomberg surveyed 10 analysts, and the highest estimate was a 38 Bcf build. The median of the range was 30 Bcf. Reuters polled 17 analysts, whose estimates ranged from a build of 24 Bcf to 42 Bcf, with a median injection of 32 Bcf. NGI modeled a 29 Bcf increase in storage.

By comparison, the EIA recorded a 45 Bcf injection into storage for the similar week last year and the five-year average build is 42 Bcf.

Daily Forecast

Bespoke Weather Services said there is little reason for prices to move much lower, as that would only serve to retighten supply/demand balances more. This is unnecessary as long as the market is aimed for storage inventories to be around or below 3.5 Tcf at the end of October.

“We know the markets like to overreact, however, but strictly from a data aspect, prices should have more upside risk versus downside,” Bespoke said.

Our work indicates that traders are looking for value to buy for one more strong rally before the summer heating season ends. Our downside target zone is $3.691 to $3.568.

We’re looking for buyers to step in on a test of this area. We don’t expect to see a move through $4.211, but we could see a rally into $3.951 to $3.890.

The next rally is expected to set up the next shorting opportunity.