Natural Gas Price Fundamental Daily Forecast – Potentially Bullish Weather Driven Finish to the Week

Natural gas futures are trading at their high of the session late Friday on forecasts calling for much colder weather and higher heating demand in mid-November than previously forecast.

Bullish traders also cited lower output so far this month and the anticipation of near-term demand once Freeport liquefied natural gas (LNG) export in Texas returns to service as two additional reasons for this week’s developing strength.

At 18:18 GMT, December natural gas is trading $6.393, up $0.418 or +7.00%. The United States Natural Gas Fund ETF (UNG) is at $20.67, up $1.57 or +8.22%.

NatGasWeather Sees Colder Overnight Trends

Early in the session on Friday, prices stabilized following colder overnight trends from both the American and European weather models, according to NatGasWeather.

“Where the pattern is finally cold enough is Nov 12-17 as subfreezing air over the West and Plains releases and spreads eastward across the Ohio Valley and Northeast,” the firm said. “However, the weather data is struggling to determine exactly how much subfreezing air will ultimately spread across the Great Lakes and Ohio Valley.”

The firm also said the American model is “more aggressive” with cold pushing east compared to its European counterpart, according to the firm.

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported on Thursday that domestic natural gas supplies rose by 107 billion cubic feet (Bcf) for the week-ended October 28. That compared with a consensus forecast for an increase of 99 Bcf.

Natural Gas Intelligence (NGI) wrote ahead of the report, estimates submitted to Bloomberg showed injection expectations ranging from 87 Bcf to 109 Bcf, with a median prediction of 102 Bcf. Results of a Reuters poll landed at a median of 99 Bcf, with estimates spanning 81 Bcf to 109 Bcf. Estimates reported to the Wall Street Journal ranged from increases of 84 Bcf to 109 Bcf, with an average of 98 Bcf. NGI estimates a 110 Bcf increase.

Total working gas stocks in storage stand at 3.501 trillion cubic feet (Tcf), down 101 Bcf from a year ago and 135 Bcf below the five-year average, the government said.

Short-Term Outlook

Going into the weekend, the market is likely to closely watch how forecasts shape up for the Nov 18-22 period, NatGasWeather said.

This could create a wave of volatility into the close on Friday and on the opening on Monday.

If the models maintain the frigid temperatures then look for a possible gap higher opening. If the models turn warmer then look for disappointment and renewed selling pressure.