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Natural Gas Price Fundamental Daily Forecast – Muted Reaction to Friendly EIA Report; Heat Returns Next Week

By:
James Hyerczyk
Published: Jul 8, 2021, 14:56 UTC

The focus is on the heat that is expected to return next week. “Hotter weather is expected to return, but not until next Tuesday,” EBW analysts said.

Natural Gas

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Natural gas futures are edging higher shortly after the release of the government’s weekly storage report at 14:30 GMT. The report showed a smaller-than-expected build of 16 Bcf. This was well below the 28 Bcf forecast and the five-year average of 63 Bcf. Last year, the EIA reported a 57 Bcf injection.

At 14:35 GMT, September natural gas futures are trading $3.648, up $0.074 or +2.07%.

Energy Information Administration Weekly Storage Report

Ahead of the EIA report, 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.

Short-Term Weather Forecast

According to NatGasWeather for July 8 to July 14, “National demand will ease the next several days as rain spreads across the East due to a cool front arriving out of the Great Lakes and merging with tropical moisture from Elsa. A stalled boundary continues to bring heavy rain to South Texas with highs of 80s, while impressive heat continues over the West with highs of 90s and 110s.

National demand will again become strong next week as upper high pressure builds back across the East with highs of upper 80s to 90s, while still hot over the West, and warm, unsettled, and humid over Texas and the South. Overall, moderate-high national demand through the weekend, then high next week.”

Daily Forecast

So far, traders are showing a limited response to the better-than-expected EIA report. Instead, the focus is on the heat that is expected to return next week. “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.

“Selling the past few days has been primarily attributed to strong selling in global oil and gas markets, although possibly aided by the fact deficits are currently at only a modest minus 143 Bcf compared to closer to minus 600 Bcf the last few times front month natural gas futures traded at these lofty levels,” NatGasWeather said. ”This suggests U.S. natural gas prices have been trading more in line with global trends in recent months as opposed to the U.S. balance.”

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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.

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