Natural Gas Price Fundamental Daily Forecast – Pressured by Bearish Demand Outlook Throughout October.

Natural gas futures are putting in a slightly better performance on Friday in a cautious trade ahead of the weekend. This follows a pair of highly volatile trading sessions that drove prices to a one-week low on Thursday. The price action reflects some concerns over high prices in Europe and Asia, but mostly worries about a bearish demand outlook throughout October.

At 13:15 GMT, December natural gas futures are trading $5.780, down $0.037 or -0.64%.

Also helping to cap gains are concerns over an improving supply situation after the government reported a weekly injection that exceeded both estimates and historical norms.

Short-Term Weather Outlook

According to NatGasWeather for October 8-14, “One weather system will bring valley rains and mountain snows to the Mountain West with cool highs of 40s to 60s. A warmer and wetter system stretches from the Great Lakes to the Southeast with highs of 60s to 80s.

The rest of the U.S. will be nice to warm with highs of 60s to 80s besides locally hotter 90s Texas. Weather systems with valley rain and high elevation snow will continue into the West next week with mild highs of 40s to 60s, while remaining warm to very warm over most of the rest of the U.S. for continued light demand.

Overall, national demand will be low to very low into the foreseeable future.”

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported on Thursday that domestic supplies of natural gas rose by 118 billion cubic feet (Bcf) for the week ended October 1. That was larger than the average increase of 111 Bcf forecast by analysts polled by S&P Global Platts.

Total stocks now stand at 3.288 trillion cubic feet (Tcf), down 532 Bcf from a year ago and 176 Bcf below the five-year average, the government said.

Ahead of Thursday’s EIA weekly storage report traders were looking at the possibility of a triple-digit injection.

NGI reported that a Bloomberg survey produced results ranging from a build of 101 Bcf to as high as 114 Bcf. The median of those results was a 105 Bcf injection.

A Wall Street Journal poll included injections as low as 84 Bcf, but the average still landed at a stout 102 Bcf. Reuters’ poll was wider, with high-side estimates hitting 115 Bcf and the median injection coming in at 104 Bcf. NGI modeled a 114 Bcf injection.

NGI said a storage build even at the low end of major surveys would surpass the five-year average build of 81 Bcf as well as last year’s 75 Bcf injection, according to the EIA.

Daily Forecast

The December natural gas futures contract is currently trapped between a pair of 50%-61.8% retracement zones at $6.603 to $6.188 and $5.736 to $5.534.

Look for a renewed upside bias on a sustained move over $6.188, while a downside bias is likely to develop on a sustained move under $5.534.

On the upside, the main target is 6.593. On the downside, the target zone is $5.269 to $4.956.