Natural Gas Price Fundamental Daily Forecast – Median EIA Injection Expected to Fall Short of 5-Year Average

Natural gas futures settled lower on Wednesday after posting a volatile two-sided trade. The market was supported early in the session on the back of robust liquefied natural gas (LNG) export demand, but the buying fizzled into the close as mid-session weather forecasts pointed toward weaker demand. Estimates calling for a higher government storage injection in Thursday’s weekly report also weighed on prices.

At 04:17 GMT, September natural gas futures are trading $3.651, up 0.003 or +0.08%.

LNG Feed Gas Volumes Climb Back Above Key Level

According to Natural Gas Intelligence (NGI), liquefied natural gas (LNG) volumes climbed back above 11 Bcf Wednesday after hovering closer to 10 Bcf for a few days because of maintenance work. Several analysts have projected that LNG levels could steadily exceed 11 Bcf in the second half of the summer – barring surprise maintenance work – and potentially eclipse 12 Bcf to set a new record.

Demand for U.S. exports of LNG is running high from both Asia and Europe, following cold winters that depleted stockpiles and several hot weeks to start the summer. Even with recent maintenance work curbing volumes, LNG demand “comparisons have averaged a startling 7.3 Bcf/d higher year-over-year for the past three weeks,” EBW Analytics Group said.

Heat May Be Delayed Until Last Week of July

While demand this week is holding strong, bolstered by persistent heat in the west and upper high pressure over large swaths of the East Coast, forecasts called for eased cooling needs next week, NGI wrote.

NatGasWeather said weather systems would track across the Great Lakes and East this coming weekend and next week, an outlook that cut several cooling degree days (CDD) from earlier forecasts.

Both the domestic and European weather models maintained a hotter pattern for the last week of July, the firm said, “although this has been delayed by one to two days in recent data due to cooler trends.”

Bespoke Weather Services posted a similar outlook.

“We continue to see a general lack of heat in the pattern compared to what was expected previously, with the 15-day period, along with July as a whole, looking to come in easily cooler than the five- and 10-year normal,” the firm said Wednesday.

In total, Bespoke’s projections showed gas-weighted degree days for July at slightly under 350, “which would be the lowest July total since 2015, and well under last July’s total of 386.”

US Energy Information Administration Weekly Storage Report

The EIA will release its weekly storage report at 14:30 GMT on Thursday. The report is expected to be a source of volatility during the trading session. According to EBW, the market “could move the market significantly – potentially in either direction.”

NGI is reporting 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.