Natural Gas Price Fundamental Daily Forecast – EIA Storage Report Expected to Show Triple-Digit Build

Early estimates are currently pointing to a triple-digit build from today’s EIA weekly storage report. This would mark the third 100 Bcf-plus injection in the past four weeks.
James Hyerczyk
Natural Gas

Natural gas futures are edging higher early Thursday on short-covering and position-squaring ahead of today’s weekly government storage report. Prices plunged the previous session, erasing earlier gains as traders raised doubts over the durability of the late October cold that had been creeping into the weather forecasts all week. Sellers also took control on the back of a forecast calling for a triple-inventory build.

At 08:54 GMT, December natural gas futures were trading $2.502, up $0.007 or +0.28%.

Prices were higher early Wednesday, but sellers took control at $2.564, putting in the intraday high slightly below the October 4 top at $2.568. Bespoke Weather Services also saw “some solid technical resistance.”

Prices “then continued lower as the midday weather models showed less potential for strong, lasting cold,” the forecaster said. “The fundamental state, while marginally tighter the last couple of days, remains very weak, and without cold, easily still supports downside risk to current prices. It is up to cold to support the market.”

Bespoke went on to say that the market will need to see a “solidly cold” pattern for late October into early November to sustain a rally.

U.S. Energy Information Administration Weekly Storage Report

Early estimates are currently pointing to a triple-digit build from today’s EIA weekly storage report. This would mark the third 100 Bcf-plus injection in the past four weeks. Furthermore, an injection in the triple digits would also comfortably top both the year-ago 82 Bcf build and the five-year average 81 Bcf for this week, according to Natural Gas Intelligence (NGI).

Bloomberg analysts are predicting a median 108 Bcf estimate. Intercontinental Exchange EIA Financial Weekly Index futures settled Tuesday at 108 Bcf. NGI’s model predicted an injection of 115 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for October 17-23, “A weather system with showers and gusty winds will exit the Northeast today with chilly conditions left in its wake with highs of upper 40s to 60s. Texas and the South will be mostly comfortable with highs of upper 60s to lower 80s, although hotter over the Southwest & Florida. High pressure and above normal temperatures will gain across the southern and eastern US this weekend with near perfect highs of 60s to 80s, while slightly cool over much of the West. Overall, decent demand Thursday through Friday, then lighter this weekend into early next week.”

Daily Forecast

The key resistance on the chart remains $2.564 to $2.568. Taking out this area will change the main trend to up. This could trigger a surge to the upside with $2.636 the minimum upside target. However, we’re not likely to get back to these prices unless the late October/early November cold weather is put back into the forecast.

The short-term range is $2.568 to $2.388. Its 50% level is $2.478. Trader reaction to this price is likely to determine the direction of the market on Thursday.

A bigger-than-expected storage build today is likely to drive the December natural gas futures contract to the bearish side of the 50% level. This would put the market in a position to challenge last week’s low at $2.388.

A smaller-than-expected storage will drive prices over $2.478, but any rally is likely to stall near $2.564 to $2.568 unless the cold weather forecast reemerges.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US