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Natural Gas Price Fundamental Daily Forecast – EIA Storage Report Expected to Show Low to Mid-20s Draw

By:
James Hyerczyk
Published: Mar 25, 2021, 10:06 UTC

The next move will be determined by whether traders decide to follow the bullish LNG news or the bearish weather outlook.

Natural Gas

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Natural gas futures are trading near flat shortly before the regular session opening and the release of the latest government storage report. The market is being underpinned by steady demand for U.S. liquefied natural gas (LNG) and worries over a potential supply disruption due to a stranded container ship blocking natural gas and crude oil carriers in the Suez Canal. However, gains are being capped by weak weather-driven demand.

At 09:41 GMT, May natural gas futures are trading $2.563, down $0.005 or -0.19%.

Steady Demand for US LNG

According to Natural Gas Intelligence (NGI), strong European and Asian demand for U.S. exports has kept LNG feed gas volumes near or above 11 Bcf/d throughout most of March. Volumes held near 11.5 Bcf on Wednesday, according to NGI data, not far from the record levels reached late last week, when exports approached 12 Bcf.

“LNG is strengthening to an extent that may see more Atlantic cargoes flow east,” providing “reason for optimism,” shipbroker Fearnleys AS said.

Blocked Suez Canal Raises Supply Issues

Data intelligence firm Kpler said tankers were backing up, and an estimated 15 LNG vessels with planned transits would likely be affected. Some delayed LNG vessels were destined for Europe and others for Asia. The potential for delays could put upward pressure on prices, analysts said.

Energy Information Administration Weekly Storage Report

NGI is reporting that for Thursday’s EIA storage report, due to be released at 14:30 GMT, median estimates clustered around the low to mid-20s. Preliminary forecasts showed increasing expectations that this week’s report could be the final draw from stockpiles of the season.

NGI modeled a 17 Bcf withdrawal for the upcoming EIA report, which covers the week ended March 19. That would compare with a 26 Bcf pull in the year-ago period and a five-year average withdrawal of 51 Bcf.

The median of a Bloomberg survey showed a withdrawal of 21 Bcf, with responses ranging from draws of 14 Bcf to 33 Bcf.

Reuters’ weekly poll found pull estimates from 16 Bcf to 41 Bcf, with a median decrease of 25 Bcf. Respondents to a Wall Street Journal survey reported withdrawal estimates that spanned 14 Bcf to 33 Bcf and averaged 26 Bcf.

Daily Forecast

The next move will be determined by whether traders decide to follow the bullish LNG news or the bearish weather outlook.

Customary spring maintenance work could eat into LNG levels temporarily in coming weeks, analysts said depleted supplies in Europe likely will drive ongoing demand for U.S. exports into the summer months, NGI reported.

Meanwhile, weather-driven demand looks “quite low, overall, the next few weeks,” Bespoke said.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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