Natural Gas Price Fundamental Daily Forecast – EIA Report Shows Signs of Tightening

Natural gas futures traded higher ahead of the weekly government storage report on Thursday and held steady after the release of the report, suggesting traders read the numbers as neutral.

At 14:38 GMT, October Natural Gas futures are trading $2.531, up $0.045 or +1.81%.

U.S. Energy Information Administration Weekly Storage Report

At 14:30 GMT on Thursday, the EIA released its weekly storage report. The report showed a build of 35 Bcf for the week-ending August 28.

According to the EIA, working gas in storage was 3,455 Bcf as of Friday, August 28. This represents a net increase of 35 Bcf from the previous week. Stocks were 538 Bcf higher than last year at this time and 407 Bcf above the five-year average of 3,048 Bcf. At 3,455 Bcf, total working gas is above the five-year historical range.

Traders were anticipating a relatively modest addition to underground gas stockpiles for the week-ending August 29. The consensus estimate called for a build of about 37 Bcf.

According to Natural Gas Intelligence (NGI), a Bloomberg survey found injection estimates ranging from 29 Bcf to 43 Bcf, with a median of 37 Bcf, while at Reuters poll found estimates ranging from 25 Bcf to 43 Bcf and a median of 35 Bcf.

NGI estimated an injection of 32 Bcf, on par with Bespoke Weather Services prediction.

Short-Term Weather Outlook

According to NatGasWeather for September 3 to September 9, “Comfortable conditions continue over the Midwest and Ohio Valley with highs of 60s to low 80s. Hot high pressure over the West will bring highs of upper 80s to 100s. The East will warm into mid-80s to low 90s as high pressure builds in for a modest bump in national demand. However, strong cool shots will arrive into the central US next week with highs of only upper 50s to 70s, including deep into Texas and the South with 80s.”

Short-Term Forecast

Cooling temperatures from the effect of Hurricane Laura are keeping demand and futures in check. The reaction to the EIA report suggests traders read the numbers as neutral. However, the 35 Bcf build marks the second week that it was lower than the week before and this indicates that supply and demand is tightening. This could be enough to send prices higher into the close if traders decide to ignore warnings about LNG demand.

LNG exports remain a major concern with some forecasting that key production facilities may not see full restoration for another two to three weeks.

EBW Analytics Group had a similar read. “The main issue at this point is the time frame for restoring power at Sabine Pass and Cameron,” analysts said Wednesday.