Natural Gas Price Fundamental Daily Forecast – EIA Report Neutral; Weakness Extends Under $1.738

Natural gas futures are trading lower shortly before the extended close on Thursday after erasing earlier gains. The early strength was attributed to a relatively small weekly injection into storage as reported by the government as a result of widespread heat and robust cooling demand last week. Gains were limited, however, by lingering concerns over weak liquefied natural gas (LNG) demand and moderating weather forecasts.

At 19:09 GMT, September natural gas is trading $1.779, down $0.040 or -2.26%.

EIA Reports Slightly Smaller-Than-Forecast Weekly Rise in US Natural Gas Supplies

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 45 billion cubic feet for the week-ended July 10. That was smaller with the average increase of 50 billion forecast by analysts polled by S&P Global Platts.

Bloomberg Analysts predicted injection estimates ranging from 38 Bcf to 50 Bcf, with a median of 47 Bcf. A Reuters poll showed a low estimate of 34 Bcf and a high of 52 Bcf with an average of 47 Bcf. Natural Gas Intelligence called for an injection of 49 Bcf.

The latest EIA injection number compares with a 67 Bcf storage build in the same week in 2019 and a five-year average injection of 63 Bcf.

Total Stocks now stand at 3.178 trillion cubic feet trillion cubic feet, up 663 billion cubic feet from a year ago, and 436 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for July 16 to July 22, “Very hot upper high pressure continues to stretch from California to Texas with highs of 100-110s, while hot and humid across the South and Southeast with mid-90s. A cool shot will keep the Northern Plains & Upper Midwest comfortable the next few days with highs of 70s to low 80s. Hotter conditions will spread across the Great Lakes and Northeast Friday-Monday with highs of upper 80s to 90s gaining in coverage for stronger national demand with the only comfortable region soon to be the Northern Plains as the Northwest also heats up into the upper 80s and 90s.”

Short-Term Outlook

Today’s EIA report indicates recovering energy use amid the lofty summer temperatures, rather than a resurgence in commercial and industrial demand amid increased economic activity. Nonetheless, the report is still neutral.

Over the near-term, trader reaction to 1.786 to $1.758 should determine the direction.

An upside bias could develop on a sustained move over $1.786, while the downside bias will resume on a sustained move under $1.758.