Natural Gas Price Fundamental Daily Forecast – EIA Report Likely to Show 58-59 Bcf InjectionGiven the short-term range of $2.333 to $2.209, a short-covering rally could take prices into its 50% to 61.8% retracement zone at $2.181 to $2.217.
Natural gas is trading slightly higher shortly before the regular session opening and the release of the U.S. Energy Information Administration (EIA) weekly storage report at 14:30 GMT. The market is likely being underpinned by short-covering and position-squaring ahead of the report with some aggressive buyers choosing to ignore forecasts of another above average storage build.
At 09:50 GMT, September natural gas is trading $2.114, up 0.031 or +1.49%.
Underpinning the market maybe forecasts calling for building heat in long-range forecasts, while capping gains are likely lower spot gas prices due to lower expected demand in the Northwest.
U.S. Energy Information Administration Weekly Storage Report
The EIA is expected to report an injection in the high 50 Bcf range. Last week, the government reported a build that beat the consensus estimates by more than 5 Bcf and came in more than 30 Bcf above the prior year’s injection.
As far as the estimates go, Bloomberg is calling for a range of 55 Bcf to 63 Bcf with a median of 59 Bcf. Natural Gas Intelligence (NGI) estimates a 59 Bcf injection. Last year, the EIA reported a 46 Bcf injection and the five-year average stands at 43 Bcf.
NatGasWeather says, “Today’s EIA weekly storage report is expected to show a build in supplies of 58-59 Bcf by the most notable surveys, larger than the 5-year average of 43 Bcf. It was hotter than normal over the Northeast and most of the West and Texas, while cooler than normal across the east-central and southeastern US. Our algorithm predicts a build of 59 Bcf, in line with expectations.”
Short-term Weather Outlook
According to NatGasWeather for August 8 to August 14, “Hot high pressure will rule the western and southern US with highs of upper 80s to 100s, hottest over the Southwest & Texas. The exception will be over the cooler Northwest. A new weather system will sweep across the Midwest and Northeast late in the week with showers and highs of only 70s to mid-80s, followed by warming early next week as high pressure briefly builds in. Additional weather systems with weak cooling will race across the northern US late next week. Overall, demand will be moderate across the northern US and high across the western and southern US, but not quite strong enough to intimate. “
Mid-Term Weather Outlook
NatGasWeather says, “The latest weather data showed weather trending a little hotter with upper high pressure forecast to arrive in the East for the August 19-22 period. The Global Forecast System (GFS) model showed especially hot weather, favoring highs in the 90s in multiple regions.”
“Essentially, the back end of the 15-day forecast is likely to be considered hot enough to satisfy, but not the front 10 days,” NatGasWeather said.
We’re looking for more choppiness in the market as the weather continues to provide cases for short-term strength and weakness. However, there is nothing to suggest the start of a lengthy rally at this time of year. Furthermore, as we’ve seen recently, any attempts to rally have been met by fresh shorting pressure.
Given the short-term range of $2.333 to $2.209, a short-covering rally could take prices into its 50% to 61.8% retracement zone at $2.181 to $2.217.
Looking ahead, we may see larger EIA builds over the next couple of weeks until the upcoming bout of heat tempers storage injections for the week-ending August 23.