Natural Gas Price Fundamental Daily Forecast – EIA Reports First Storage Withdrawal

Natural gas futures finished lower on Thursday as investors posted a mixed reaction to the weekly government storage report.

January Natural Gas futures settled at $3.153, down 0.026 or -0.82%.

According to the U.S. Energy Information Administration (EIA), natural gas stocks decreased by 18 million cubic feet for the week-ending November 10. Analysts were looking for a draw of between 3 to 15 billion cubic feet (bcf) for an average of 9.

The five-year average for the week is an injection of 15 billion cubic feet. The five-year average for the week is an injection of 15 billion cubic feet, and last year’s storage injection for the week totaled 34 billion cubic feet. Natural gas inventories rose by 15 billion cubic feet in the week-ending November 3.

Forecast

January Natural Gas is trading higher early Friday. The strong recovery is a sign that investors are respecting the technical retracement zone at $3.151 to $3.111. Yesterday’s low came in at $3.147.

If this low holds then the new short-term range becomes $3.321 to $3.147. This makes its 50% to 61.8% zone a potential upside target.

After bottoming at $2.983 on November 1, buyers will be trying to form a potentially bullish secondary higher bottom inside $3.151 to $3.111. If successful then they may make a run at this week’s high at $3.321.

The set-up is there for a strong rally but it’s not going to happen until temperatures turn extremely cold, or a lingering cold front forms.

Traders are a little cautious about playing the long side of the market because the weather isn’t quite cold enough to sustain a rally. Demand is expected to be moderate for the rest of this week with warmer temperatures in the central and southern states and mild weather in most of the West.

According to natgasweather.com, the weekend forecast calls for a blast of cold across the Great Lakes, Northeast and Mid-Atlantic states, even pushing into the south. Overall demand will start to weaken, then rise by the end of next week.

Continue to watch the price action and read the order flow at $3.151 to $3.111. Trader reaction to this zone will tell us if the buyers or the sellers are controlling the market at this time.