Natural Gas Price Fundamental Daily Forecast – Massive Draw Expected in Next Week’s EIA Report

Natural gas futures are trading slightly better on Friday, clawing back some of the losses from the previous session as traders assess the impact of the current unprecedented disruptions on the supply/demand balance.

At 14:28 GMT, April natural gas futures are trading $3.004, up $0.034 or +1.14%.

EBW Analytics Group Outlook

Milder temperatures over the weekend and moderating prices in the physical market could put pressure on futures prices near-term, analysts at EBW Analytics group said Friday.

Even though cash prices remained elevated in Thursday’s trading, including prices that “would have set record highs: prior to the unprecedented conditions that gripped the market earlier in the week, “much milder weather is expected to arrive by Sunday,” the EBW analysts said. “This is likely to drive prices at most hubs significantly lower, putting further downward pressure on futures.”

Still, as the March contract sold off in Thursday’s session, dropping 13.2 cents, the market effectively “ignored the big picture,” according to the firm.

Natural Gas Intelligence (NGI) reported the deep freeze that plunged into the Lower 48 over the past week has driven “enormous draws” and caused “massive production losses,” according to EBW analysts. This has “reversed the impact of very mild early winter weather. When winter ends, storage will be far below the five-year average, requiring much higher prices to balance the market.”

Short-Term Weather Outlook

According to NatGasWeather for February 19 -25, “Arctic air over the Midwest, Plains, and Texas will rapidly moderate the next several days with highs reaching the 50s to 70s by late this weekend.

Strong demand will shift over the Great Lakes and East as cold air arrives with frosty lows of -10s to 20s, along with areas of rain and snow.

The West will see a mix of mild to cool conditions, along with increasing showers.

Most of the U.S. will be warmer next week with highs of 30s to 50s across the northern U.S. and nice 60s and 70s over the southern U.S.

A late week cold shot will push into the Midwest with rain, snow, and chilly lows of 0s to 20s.

Overall, very strong national demand through Sunday, easing to moderate for early and mid-next week, then back to strong late next week.”

Energy Information Administration Weekly Storage Report

On Thursday the Energy Information Administration (EIA) reported a 237 withdrawal from U.S. gas stocks for the week-ended February 12, a print that disappointed versus consensus expectations but came in much larger than the year-ago 141 Bcf draw and the 142 Bcf five-year average.

Total working gas in storage stood at 2,281 Bcf as of February 12, down 105 Bcf from year-ago levels and 57 Bcf above the five-year average, EIA said.

Daily Forecast

Traders are already looking ahead to next week’s EIA report for the week-ending February 19. Because of the supply disruptions in Texas due to the freeze, analysts are having a hard time coming up with a withdrawal number. Early modeling points to a draw of 320 Bcf, but that number is likely to be revised several times before the report is released next Thursday.

TPH Analysts said that while it’s unlikely that the upcoming report breaks the record 359 Bcf weekly draw reported in 2018, it should “officially move us below the five-year average for the first time since 2019 as the bullish setup continues to deepen.”

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