Natural Gas Price Fundamental Daily Forecast – Sideways into EIA Storage Report

Natural gas futures traded in a tight range on Tuesday, as investors took a breather following the market’s biggest loss in six months the previous day. Prices are also rangebound early Wednesday as investors continue to react to updated weather forecasting models calling for weak demand over the next 14 days.

On Tuesday, August natural gas closed at $2.919, up 0.002 or +0.07%. Early Wednesday, the market is trading $2.916, down $0.014 or -0.48%.

Oversold technical conditions could lead to periodic short-covering rallies, but these rallies are likely to attract fresh shorting pressure as long as the weather forecasts remain bearish.

Short-term, cooler temperatures are expected to hit the eastern U.S. the next couple of days. Highs are likely to be in the upper 60s to 70s, leading to lower demand for heating or cooling.

Over the next two weeks, considerably cooler temperatures are expected to sweep through northern and eastern U.S.

Forecast

The fundamentals suggest prices should continue to face pressure as long as the weather forecasts remain bearish, but the technical picture is set up for a short-covering rally due to oversold technical conditions. Therefore, we could see a two-sided trade leading into Thursday’s U.S. Energy Information Administration’s (EIA) weekly storage report.

According to the EIA, as of the week-ending June 9, natural gas in storage currently stands at 2.709 trillion cubic feet. This is about 10.6% lower than levels at this time a year ago but 8.4% above the five-year average for this time of year.

Thursday’s weekly storage report is expected to show a build of 56 billion cubic feet in the week-ended June 16.