Natural Gas Price Fundamental Daily Forecast – May Need to Pullback into $4.021 – $3.978 to Attract New Buyers

Natural gas prices are struggling to gain their footing shortly after the regular session opening on Friday as traders continue to shrug off yesterday’s potentially bullish government storage report and weather forecasts calling for hot temperatures to return starting at mid-month.

At 12:37 GMT, September natural gas futures are trading $4.123, down $0.017 or -0.41%.

Energy Information Administration Weekly Storage Report

U.S. natural gas storage volumes increased by 13 Bcf in the week-ending July 30, according to the U.S. Energy Information Administration (EIA). Ahead of the weekly storage report, analysts and market observers did not appear to have a firm grasp on the size of the expected injection.

According to NGI, a Wall Street Journal poll produced estimates ranging from an increase of 14 Bcf to as much as 34 Bcf. Reuters polled 17 analysts, whose estimates were in the same range with a median injection of 21 Bcf. A survey by Bloomberg had a median injection of 18 Bcf, and NGI modeled a 17 Bcf build.

The 13 Bcf build came in lower than last year’s 32 Bcf infection and the 30 Bcf five-year average build, according to the EIA.

Working gas in storage increased to 2.727 Tcf. U.S. storage volumes now stand at 542 Bcf, or 16.6% less than the year-ago level of 3.269 Tcf, and 185 Bcf, or 6.4% less than the five-year average of 2.912 Tcf.

Short-Term Weather Outlook

According to NatGasWeather for August 6 to August 12, “National demand will be moderate for one last day as comfortable highs of 70s to 80s lingers across the Great Lakes and Ohio Valley. National demand will then increase to strong levels this weekend through next week as temperatures warm across the East into the upper 80s to mid-90s, while also hot with highs of mid-90s to 100s over Texas and the South for high to very high national demand.

Weather systems with showers will cool the Northwest this weekend into the 70s and 80s, although becoming hot next week with highs of upper 80s to 100s.

Overall, moderate national demand through Friday, then increasing to high this weekend and very high next week.

Daily Forecast

Despite the subdued response to the EIA report, natural gas is bullish. Nothing happened that would change the fact that “There simply is not adequate supply for the market to feel comfortable with storage levels right here and now,” according to Bespoke Weather Services.

The price action suggests investors may be shy about buying strength at current price levels, which suggests investors may still be in the “buy the dip” mode.

Given the short-term range of $3.837 to $4.205, the near-term direction of the September natural gas futures contract is likely to be determined by trader reaction to its support zone at $4.021 to $3.978.