Natural Gas Price Fundamental Daily Forecast – EIA Storage Report Consensus: 71 Bcf Injection

The rapidly changing tropical storm is too hard to predict so we feel the price action on the daily chart is all we need to determine the direction of the market today. Essentially, look for an upside bias to develop on a sustained move over $2.512, and for a downside bias to develop on a sustained move under $2.440.
James Hyerczyk
Natural Gas

Natural gas futures are trading a little higher on Thursday shortly before the regular session opening and the release of the U.S. Energy Information Administration weekly storage report. On Wednesday, the market surged to a new high for the week, but buyers continue to fight stubborn technical resistance inside a retracement zone at $2.440 to $2.512. Trader reaction to this zone will set the tone for the rest of the week.

At 10:17 GMT, August natural gas futures are trading $2.458, up 0.014 or +0.57%.

Helping to underpin prices are a storm over the Gulf of Mexico. Although this storm is expected to bring rain and cooler temperatures, once it passes, “the pattern remains impressively hot as we move back into the back half of July,” according to Bespoke Weather Services.

The pattern could shift “a little less hot as we head toward the final week of the month, but still hot enough so that we project” total July gas-weighted degree days “will rank in the top three for any July on record, behind only 2011 and 2012,” according to Bespoke.

U.S. Energy Information Administration Weekly Storage Report

Traders are looking for today’s EIA report, due to be released at 14:30 GMT, to show a near-average build for the week-ending July 5. The consensus calls for a 71 Bcf build.

Bloomberg analysts are looking for a 76 Bcf build, with estimates ranging from 62 Bcf to 84 Bcf. Reuters is predicting a 73 Bcf build, with a range of 62 Bcf to 80 Bcf. The ICE EIA Financial Weekly Index settled Tuesday at 80 Bcf, and Natural Gas Intelligence is looking for a 70 Bcf injection.

Last year, the EIA recorded a 55 Bcf injection for the period, and the five-year average build is 71 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for July 11-17, “The Southern US remains hot with highs of 90s from Texas to the Southeast, 100s over the Southwest. The exception will be along the Gulf Coast where a tropical system will bring heavy showers and minor cooling, then finally tracking inland over Louisiana and Texas this weekend. The Midwest/Great Lakes to Northeast will cool a few degrees today as a weather system races through then warming back up into the upper 80s to lower 90s Saturday-Sunday. The West will be very warm to hot besides the Northwest where showers will lead to minor cooling. Overall, national demand will be high.

Daily August Natural Gas

Daily Forecast

The main range is $2.745 to $2.134. The market is currently testing its retracement zone at $2.440 to $2.512. Trader reaction to this zone will set the tone today.

The main trend is up according to the daily swing chart. A trade through $2.489 will reaffirm the uptrend. This could lead to a test of $2.512. This price is the trigger point for an acceleration to the upside with the next potential target coming in at $2.653.

A sustained move under $2.440 will signal the return of sellers. The first downside target is the minor bottom at $2.360. Taking out this level will shift momentum to the downside with the next target zone $2.312 to $2.270.

The rapidly changing tropical storm is too hard to predict so we feel the price action on the daily chart is all we need to determine the direction of the market today.

Essentially, look for an upside bias to develop on a sustained move over $2.512, and for a downside bias to develop on a sustained move under $2.440.

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