Natural Gas Price Fundamental Daily Forecast – Short-Term Trend Up with $2.831 – $2.869 Next Target

Natural gas futures surged early Thursday after government storage data came in lower than expected. At 0410 GMT, September Natural Gas futures are trading $2.766, up $0.011 or +0.40%.

According to the U.S. Energy Information Administration, weekly natural gas in the U.S. rose by 24 billion cubic feet (bcf) in the week-ended July 20, below the estimate of 39 billion cubic feet. That compared with a build of 46 Bcf for the week-ending July 13, an increase of 17 Bcf from a year earlier and a five-year average increase of 46 Bcf.

According to EIA estimates, working gas in storage was 2,273 Bcf as of Friday, July 20, 2018. This represents a net increase of 24 Bcf from the previous week. Stocks were 705 Bcf less than last year at this time and 557 Bcf below the five-year average of 2,830 Bcf. At 2,273 Bcf, total working gas is within the five-year historical range.

Prior to the release of the report, a Bloomberg survey showed a median 36 Bcf injection, with a range of 28 Bcf to 52 Bcf. The ICE EIA Financial Weekly Index futures came closer to the actual figure, settling Wednesday at an injection of 25 Bcf.

Bespoke Weather Services said the EIA figure came in about 9 Bcf below its estimate, largely because of a “massive draw” reported for the South Central region.

“We had been looking for a small implicit revision from last week’s very tight print, but instead today’s print seemed to confirm last week,” Bespoke said. “The result is a natural gas strip that is remaining quite firm, with December leading in early post print trading.”

“Any winter leadership would be quite bullish moving toward, and short-term we see $2.85 in play off such a supportive print, especially with options expiry today. Any rebound in production will result in a rather quick reversal, though.”

Although prices rose on Thursday, the action was a bit muted because traders continue to feel that with production near record levels, the stockpiles will be replenished once the summer cooling season comes to an end.

The daily chart indicates the short-term trend is now up. This could create enough upside momentum to challenge a key technical retracement zone at $2.831 to $2.869. We expect the market to run into resistance and renewed hedging pressure inside this zone.