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Natural Gas Price Fundamental Daily Forecast – Prices Have Fallen More than 20 Cents Since August 21

By:
James Hyerczyk
Published: Sep 7, 2018, 09:02 UTC

According to the U.S. Energy Information Administration, U.S. natural gas in storage increased by 63 Bcf to 2.568 Tcf for the week-ended August 31. The build was slightly more than the consensus calling for a 60-Bcf addition.

Natural Gas

Natural gas futures are trading slightly better early Friday after finishing lower yesterday following the release of a government report that showed a bigger-than-expected storage build. The main trend is down according to the daily swing chart.

The market is also trading on the weak side of several technical retracement zones. This is creating the downside momentum that could lead to a challenge of the next support levels at $2.751, $2.703 and $2.688.

At 0845 GMT, October Natural Gas futures are trading $2.777, up $0.005 or +0.18%.

According to the U.S. Energy Information Administration, U.S. natural gas in storage increased by 63 Bcf to 2.568 Tcf for the week-ended August 31. The build was slightly more than the consensus calling for a 60-Bcf addition.

The injection was also more than the 60-Bcf build reported during the corresponding week in 2017 but less than the five-year average addition of 65 Bcf, according to EIA data.

As a result, stocks were 643 Bcf, or 20%, less than the year-ago level of 3.211 Tcf, and 590 Bcf, or 19%, less than the five-year average of 3.158 Tcf.

Front month futures have fallen about 18 cents over the past two weeks despite low storage inventory. The move has been fueled by generally cooler temperatures and record production levels.

According to Platts Analytics, even with slightly better builds over the next two weeks, they will still be below the five-year average and will further widen the deficit.

Platts is also saying it expects “storage to peak at approximately 3.3 Tcf before the switch to withdrawals in early November. If so, it would be the lowest level to start the heating season since 2005, when stocks peaked at 3.2 Tcf. A colder-than-normal winter could push up prices due to the low inventory despite production gains.”

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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