Natural Gas Price Fundamental Daily Forecast – Forecasts Calling for Lower Cooling Demand Weighing on Prices

Natural gas futures are trading higher on Friday, reversing earlier weakness while clawing back nearly half of yesterday’s losses. Thursday’s sell-off and today’s early dip were fueled by a disappointing government storage report and new forecasts predicting a drop in cooling demand until the end of the month. Also weighing on prices was a decline in U.S. liquefied natural gas (LNG) export levels.

At 12:36 GMT, September natural gas futures are trading $3.635, up $0.034 or +0.94%. This is up from an intraday low of $3.572.

US Energy Information Administration Weekly Storage Report

On Thursday, the U.S. Energy Information Administration (EIA) reported an injection of 55 Bcf natural gas into storage for the week-ended July 9. The number topped the year-earlier increase of 47 Bcf and the five-year average 54 Bcf injection.

NGI reported before the report that “a Bloomberg survey Wednesday showed injection estimates ranging from 39 Bcf to 53 Bcf and a median of 49 Bcf. A Reuters poll of analysts found estimates ranging from a build of 38 Bcf to 56 Bcf, with a median injection of 48 Bcf.” NGI’s model estimated an injection of 39 Bcf.

The median results would modestly surpass the actual increase of 47 Bcf a year earlier but fall short of the five-year average of 54 Bcf, according to the EIA.

The build for the July 9 week lifted inventories to 2,629 Bcf. That compared with the year-earlier level of 3,172 Bcf and the five-year average of 2,818 Bcf, according to the EIA.

Bespoke Weather Services Sees High Temperatures Easing

Bespoke Weather Services noted that, while lofty summer temperatures persist in parts of the Plains and across much of the West, the intensity of heat has eased from the record highs posted in June.

For the rest of July, Bespoke said, heat is expected to be below normal across most of the southern United States, curbing national cooling demand. The firm said projected gas-weighted degree days for the current month sit at 348. If that proves accurate, it would be the lowest July total since 2015 and well under last July’s total of 386.

Daily Forecast

The minor range is $3.789 to $3.495. Its 50% level at $3.642 is currently being tested. Trader reaction to this level is likely to control the market’s direction on Friday.

A sustained move under $3.642 will indicate the presence of sellers. If this creates enough downside momentum then look for a break into a short-term support level at $3.472.

Overtaking $3.642 will signal the presence of buyers. If this move is able to create enough near-term momentum, we could see a retest of $3.751 or $3.789.

Without the weather to generate upside momentum, it’s hard to build a case for a breakout over $3.789. Long liquidation and fresh shorting pressure are likely to drive the market into $3.495 – $3.472 over the short-run.