Natural Gas Price Fundamental Daily Forecast – EIA to Report Robust Build then Weather Market Could Begin

Natural gas futures are trading flat after running into technical resistance earlier in the session shortly before the release of the government’s storage report on Thursday. The market has been driven higher this week by forecasts calling for increased heating demand around mid-November and consistent demand for U.S. exports of liquefied natural gas (LNG) while the world still faces tight supply conditions.

At 13:07 GMT, December natural gas futures are trading $5.680, up $0.010 or +0.18%. This is down from $5.876.

Bullish Factors

NatGasWeather said the data trended milder early Wednesday for the upcoming weekend through the middle of next week. However, it shifted slightly cooler for the November 15-18 time frame.

Meanwhile, demand for U.S. exports remains consistently strong with global gas supplies lighter than in past years. According to Natural Gas Intelligence (NGI), while uneven from one day to the next, LNG feed gas volumes have hovered close to 2021 highs of around 11 Bcf so far this month, providing support for futures. A global economic rebound from the depths of the coronavirus, combined with extreme weather this year, has fueled robust demand for natural gas across Europe and Asia.

US Energy Information Administration Weekly Storage Report

The EIA weekly storage report, scheduled to be released at 14:30 GMT, is expected to show another robust increase for the week-ended October 29.

Ahead of the report, NGI is reporting that results of a Reuters survey ranged from injection estimates of 47 Bcf to 71 Bcf, with a median build of 64 Bcf. A Wall Street Journal survey landed at an average build expectation of 64 Bcf. Estimates ranged from increases of 47 Bcf to 74 Bcf. NGI’s model predicted a 68 Bcf injection.

These estimates compare with a 27 Bcf increase in storage a year earlier and a five-year average injection of 38 Bcf. If the midpoints of the polls prove accurate, storage levels would be about 3% below the five-year average, according to NGI.

Daily Forecast

Traders will face a clash between stale data – the EIA report and fresh data – the two-week weather forecast. I don’t think they are going to be too influenced by the EIA numbers unless the report comes in well-below expectations. Their main focus at this time is the weather.

NGI said that given the looming cold, analysts are anticipating withdrawals to begin with EIA’s report for the second week of November. That could leave storage at around 3.6 Tcf.

Technically, December natural gas futures remain rangebound with $5.832 to $6.011 the key resistance and $5.269 to $4.956 the major support.