Natural Gas Price Fundamental Daily Forecast – Pressured by Slight Shift in Weather Forecast, Neutral EIA Report

Natural gas futures finished lower on Thursday as weekly government storage data fell largely in line with trader expectations despite reports of strong demand. Weather reports showing an easing of cold temperatures also weighed on prices. The inability to exceed last week’s multi-month high also led to profit-taking as speculative buying eased.

On Thursday, December Natural Gas futures settled at $3.250, down 0.119 or -3.66%.

The market was under pressure even before the government data was released at 1430 GMT on Thursday. Ahead of the trading session, sellers were reacting to a report from Bespoke Weather Services which said “weather models maintained long-range cold risks overnight but weakened the intensity of ‘extremely cold’ guidance Wednesday.

“Both the European and Global Ensemble Forecast System models showed cold sticking around into the end of Week 2, including ‘favorable blocking to trap cold weather across the U.S. into early Week 3,’ the firm said. ‘Cold is increasingly shown peaking Days 12-14 and then gradually fading, a trend that if continued could eventually prove bearish as we look for the pattern to break down later Week 3 into Week 4.”

Furthermore, “Our sentiment remains neutral as through we await a period of heavy selling once cold eases and hold a bearish bias, we are skeptical this morning’s selling is sustained,” Bespoke said.

 U.S. Energy Information Administration (EIA)

Thursday morning, the EIA announced an injection of 81 Bcf into storage for the week ended October 12. This figure put the current national stocks at 3.307 Tcf. Inventories now stand 601 Bcf lower than year-ago levels and 605 Bcf lower than the five-year average of 3.642 Tcf.

Thursday’s number fell largely in line with the 83 Bcf build forecast by a consensus of analysts. The five-year average build for the same time period is 79 Bcf.