Natural Gas Price Fundamental Daily Forecast – Polls Show Widespread Expectations for Steep Pull in EIA Report

Natural gas prices are trading lower on Wednesday shortly before the release of the government’s weekly storage report at 17:00 GMT. The data is coming out a day earlier due to the Christmas holiday and will cover activity for the week-ending December 23.

The early price action suggests a change to the current forecasts that helped drive prices to their highest levels since December 2 during the previous session. Additionally, traders continue to react to a key technical zone at $2.685 to $2.754 that could determine the near-term direction of the market.

At 13:27 GMT, February natural gas is trading $2.700, down $0.049 or -1.78%.

Short-Term Weather Outlook

According to NatGasWeather for December 23 to December 29, “National demand will be light into Thursday as above normal temperatures dominate most of the U.S. with highs of 40s to 70s, warmest across the southern U.S. A colder exception will occur over the Northern Rockies and Plains as a strong Canadian cold shot drops lows into the -10s to 20s.

As this system spreads into Northern Texas and eastward across the rest of the Midwest, Great Lakes, and East Friday – Saturday, national demand will increase.

A mild break is expected over much of the U.S. Sunday – Monday, followed by additional weather systems/cold shots mid-next week.

Overall, national demand will be low into Thursday, high Friday-Saturday, then moderate Sunday – Tuesday.”

US Energy Information Administration Weekly Storage Report

According to Natural Gas Intelligence (NGI), “Trades took note of optimistic forecasts in this week’s Energy Information Administration (EIA) storage report, which will be released at 17:00 GMT. That is a day earlier than normal because of the Christmas holiday.”

“Polls on Tuesday showed widespread expectations for a steep pull for the week-ended December 18. A Bloomberg survey showed withdrawal expectations ranging from 146 Bcf to 180 Bcf, with a median of 159 Bcf. A Reuters poll, meanwhile, landed at a median withdrawal of 160 Bcf, with pull estimates spanning from 142 Bcf to 180 Bcf.”

“A Wall Street Journal survey found an average withdrawal expectation of 159 Bcf. Estimates ranged from decreases of 146 Bcf to 179 Bcf.”

“NGI predicted a 159 Bcf withdrawal, above the 146 Bcf pull reported a year earlier and higher than the five-year average 127 Bcf withdrawal.”

Daily Forecast

Our work indicates the direction of the market on Wednesday will be determined by trader reaction to a short-term 50% to 61.8% retracement zone at $2.685 to $2.754.

We’re looking for a downside bias to develop on a sustained move under $2.685 and for an upside bias on a sustained move over $2.754.

For a look at all of today’s economic events, check out our economic calendar.