Advertisement
Advertisement

Natural Gas Price Fundamental Daily Forecast – Feeble EIA Storage Build Providing Early Support

By:
James Hyerczyk
Published: Jul 9, 2021, 11:01 UTC

The short-term range is $3.789 to $3.495. Its pivot at $3.642 is controlling the direction of the market.

Natural Gas

In this article:

Natural gas futures are trading flat on Friday after posting a strong rebound rally the previous session following a feeble increase in inventories that indicated a tight supply/demand balance and renewed worries over adequate storage levels.

At 10:37 GMT, September natural gas is trading $3.662, down $0.005 or -0.14%.

On Thursday, prices bounced back from an early loss after the U.S. Energy Information Administration (EIA) reported a 16 Bcf injection into storage for the week ended July 2. This number came in well below a number of estimates.

“Make no mistake about it, the number is quite strong, reflective of the tightest supply/demand balances we have seen yet this warm season,” Bespoke Weather Services said. “…We need more material gains in production in order to get back on a trajectory that promotes sufficient storage levels as we head toward and then into the upcoming winter season.”

Energy Information Administration Weekly Storage Report

Ahead of the EIA reading of 16 Bcf, Natural Gas Intelligence (NGI) wrote that a Bloomberg poll produced a median of 29 Bcf. Predictions ranged from 19 Bcf to 47 Bcf. Results of a Reuters survey, meanwhile, ranged from injections of 22 Bcf to 64 Bcf, with a median build of 29 Bcf. NGI’s model predicted a 28 Bcf build for the report, which covers the week ended July 2.

Working gas in storage was 2,574 Bcf as of Friday, July 2, according to EIA estimates. Stocks were 551 Bcf less than last year at this time and 190 Bcf below the five-year average of 2,764 Bcf. At 2,574 Bcf, total working gas is within the five-year historical range.

Short-Term Weather Forecast

According to NatGasWeather for July 9 to July 15, “National demand will ease through the weekend as rain impacts the East due to a cool front over the Ohio Valley merging with tropical moisture from Elsa. A stalled boundary continues to bring heavy showers and 80s to South Texas, while dangerous heat continues over the West with highs of 90s to 110s.

National demand will again become strong next week as upper high pressure builds back across the East with the return of highs of upper-80s to 90s, while still hot over the West, and warm, showery, and humid over the central U.S. due to a stalled weather system.

Overall, moderate-high national demand through the weekend, then high next week.”

Daily Forecast

“Hotter weather is expected to return, but not until next Tuesday,” EBW analysts said.

Although the weekend is expected to be cooler in over the Great Lakes and the East, conditions remain “rather hot” for days five through 15, with highs in the 90s expected to return to the East and “impressively hot” temperatures expected to remain over the West, NatGasWeather said.

The short-term range is $3.789 to $3.495. Its pivot at $3.642 is controlling the direction of the market. A sustained move over this level could create the upside momentum needed to challenge $3.789. A sustained move under this pivot could lead to a retest of the minor bottom at $3.495.

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.

Did you find this article useful?

Advertisement