Natural Gas Price Fundamental Daily Forecast – EIA Report Supportive, but Needs Fresh Catalyst to Extend Rally

Natural gas futures are trading higher shortly after the regular session opening on Friday following yesterday’s surprise decline in reaction to a slightly bullish government storage report. Helping to provide support is strong European demand for U.S. liquefied natural gas (LNG) and elevated demand from Asia also. U.S. weather-related demand continues to average close to normal for this time of year although some traders are starting to bet on a hot summer.

At 12:20 GMT, June natural gas futures are trading $2.944, up $0.016 or +0.55%.

Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas rose by 60 billion cubic feet (Bcf) for the week ended April 30.

Ahead of the report, Natural Gas Intelligence (NGI) reported that a Bloomberg survey showed a median estimate for a 66 Bcf injection, with predictions ranging from 49 Bcf to 76 Bcf. Estimates generated by a Reuters poll spanned increases of 49 Bcf to 76 Bcf, with a median of 65 Bcf. The Wall Street Journal’s weekly survey showed estimates ranging from increase of 52 Bcf to 70 Bcf, with an average of 62 Bcf.

Total stocks now stand at 1.958 trillion cubic feet (Tcf), down 345 Bcf from a year ago and 61 Bcf below the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for the week-ending May 7 to May 13, “Weather systems and associated cool shots with showers and thunderstorms will continue across the Midwest and Northeast through next week with highs of 50s and 60s and lows of 30s and 40s. Cooling has also arrived into the South/Southeast with highs of 70s to low 80s for lighter demand, although warming back into the 80s and 90s from Texas to the Southeast late this weekend. The West will experience showers and cooling over the Northwest in the coming days with highs of 50s and 60s but very warm over the Southwest with highs of 80s to 90s. Overall, moderate the rest of the week.”

Daily Forecast

Despite the sideways to lower trade this week, we still have a bullish outlook for natural gas prices. The storage numbers support higher prices later this summer, but the timing may be off because weather conditions are not quite bullish yet for this time of year.

The main trend is up according to the daily swing chart. A trade through $3.001 will signal a resumption of the uptrend. The main trend will change to down on a move through $2.735.

The first support comes in at $2.868. This is followed by $2.837 and $2.802.

At this time, it appears that traders are having a hard time buying strength and playing for a breakout to the upside. If they had a catalyst, perhaps they would be more aggressive.

If they’re not buying strength then they may be looking for a pullback into support which comes in at $2.868 to $2.802.