Natural Gas Price Fundamental Daily Forecast – Short-Term Pullback Should Attract New Buyers

Natural gas futures are edging lower shortly before the regular opening on Friday as investors continue to assess the impact of yesterday’s government storage report that came in at the high end of estimates, triggering a steep break. Spot gas prices also retreated across most of the country. Natural Gas intelligence’s (NGI) Spot Gas National Average dropped 9.5 cents to $2.680.

At 11:38 GMT, June natural gas futures are trading $2.902, down $0.009 or -0.31%.

Forecasts calling for mild weather patterns over the next couple of weeks are also capping gains, but firm liquefied natural gas (LNG) demand is expected to underpin prices.

Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported on Thursday that domestic supplies of natural gas rose by 15 billion cubic feet (Bcf) for the week ended April 23.

Total stocks now stand at 1.898 trillion cubic feet (Tcf), down 302 Bcf from a year ago and 40 Bcf below the five-year average, the government said.

Natural Gas Intelligence (NGI) reported ahead of the report, a Bloomberg survey of nine analysts produced injections estimates ranging from 6 Bcf to 19 Bcf, with a median build of 8 Bcf. Reuters polled 18 analysts, whose estimates ranged from an injection of 6 Bcf to 28 Bcf, with a median build of 9 Bcf. A Wall Street Journal poll also produced results within that range. NGI projected inventories would grow by 13 Bcf.

Short-Term Weather Outlook

NatGasWeather said the latest weather data gained some demand for the 15-day period. This is because of colder weather forecast for the middle of next week into the following week as late-season weather systems and associated cool shots sweep across the northern and central United States. However, added demand through colder trends this late in the heating season are not expected to translate to nearly as much demand compared to earlier in the year, according to NatGasWeather.

“In addition, we believe the natural gas markets would prefer hotter trends over colder trends, as this would suggest summer heat will arrive early instead of late.”

Daily Forecast

Prices could pull back over the short-run into support, but we may not see a change in trend on the move as buyers will likely welcome the pullback so that they can enter at more favorable price levels.

I think buying the dip will be the strategy moving forward since it’s a little too early in the season to chase higher prices.

Near-term bullish factors will be a more consistent decline in production, stronger power burns and an early return of hotter-than-usual temperatures.