Natural Gas Price Fundamental Daily Forecast – EIA Reports 7 Bcf Injection, Slightly Below Lowest Estimate

Natural gas futures are under pressure shortly before the release of the government’s weekly storage report at 17:00 GMT. The report is being released a day earlier and at a later time because of Thursday’s U.S. Veteran’s Day holiday.

The market turned sharply lower from the start as forecasts calling for milder conditions in the Lower 48 in late November encouraged weak speculative bulls to liquidate their positions, triggering the plunge.

At 16:30 GMT, December natural gas futures are trading $4.872, down $0.107 or -2.15%.

Bespoke Weather Services Outlook

Natural Gas Intelligence (NGI) reported that according to Bespoke Weather Services, recent model runs as of early Wednesday advertised warmer trends and lower overall weather-driven demand. Perhaps more important, models hinted at a pattern change late this month that gave the forecast an overall “bearish tilt,” the firm said.

“We are again in a situation,” Bespoke said, where overall gas-weighted degree day projections “do not tell the story when it comes to the flavor of the forecast, as model projections heading into late month are quickly trending toward a Pacific pattern that is much less favorable to cold air delivery into the U.S.

This pattern change differs “wildly” from projections just a few days ago, and “is not something that as of yet carries good confidence,” the firm added.

Should forecasts continue to point toward milder conditions heading into late November, “prices will definitely still move lower, likely at least testing $4.50, though confidence in weather remains below average, for now,” Bespoke said.

US Energy Information Administration Weekly Storage Report

At 17:00 GMT, the EIA reported at build of 7 billion cubic feet (Bcf) in government storage. This was slightly below the lowest estimate.

Ahead of the government report, NGI reported a Bloomberg poll found injection estimates ranging from 8 Bcf to 15 Bcf, with a median of 9 Bcf. Reuters’ weekly survey landed at a median build of 10 Bcf, with a low estimate of 3 Bcf and a high of 15 Bcf.

NGI forecast a build of 15 Bcf. Energy Aspects also landed on a 15 Bcf injection for the upcoming report. For the year-earlier period, EIA recorded an injection of 2 Bcf, and the five-year average is a 25 Bcf build.

Daily Forecast

The key level to watch into the close on Wednesday is $4.956. A sustained move under this level will indicate the selling pressure is getting stronger. A sustained move over this level will mean the selling pressure is weakening.

Short-term traders may try to take advantage of a break under $4.956 by following the increasing downside momentum. However, you have to be careful selling weakness because the longer-term traders view prices as relatively weak and may step in with enough buying power to stop the price slide.