Natural Gas Price Fundamental Daily Forecast – Expect EIA Storage Injection in Low 50s

Natural gas futures are trading slightly better shortly before the regular session opening. The range is tight and volume is low as traders prepare for today’s U.S. Energy Information Administration weekly storage report. Technical factors are also playing a role in the price action with the market straddling a pair of retracement levels for a fifth day. This tends to indicate investor indecision and impending volatility.

At 0910 GMT, December Natural Gas futures are trading $3.254, up $0.027 or +0.84%.

On Wednesday, natural gas gave up earlier gains after the latest weather forecasts showed milder trends through mid-November. Over the short-run, however, consecutive cold fronts could drive up spot gas prices in the Midwest and the Northeast.

Despite the setback, the market remains underpinned because the data suggests that the expected impact in demand should have little impact on the predicted storage deficits.

Short-Term Weather Forecast

According to NatGasWeather.com for the period October 25 to October 31, “Cool conditions will linger across Midwest to Northeast the next few days with highs of 40s and 50s, while another reinforcing cold shot to follow this weekend into early next week. The West will be warm with highs of 60’s to 80’s due to high pressure. A weather system will track across the Southeast the next couple days and then track north up the Atlantic Coast while strengthening, bringing rain and windy conditions. Overall, demand will be near to slightly stronger than normal through the middle of next week, then dropping below.”

Forecast

The short-term range is $3.409 to $3.183. Its 50% level or pivot is $3.296. Based on the price action the past four sessions, the pivot is controlling the short-term direction of the market. Look for a bullish tone to develop on a sustained move over this level. Look for the downside bias to resume if this level provides resistance.

The first support is $3.185 to $3.183, followed by a bottom at $3.161. The best support zone is $3.125 to $3.057. A trade into this area is likely to attract buyers.

Unless the forecasts call for extreme cold temperatures or an extended cold spell, the $3.409 top will be hard to exceed at this time. If you recall, this top was put in last week during the height of the hurricane scare.

Estimates for today’s Energy Information Administration (EIA) report range from 47 Bcf to 72 Bcf. The consensus is the low 50s.