Natural Gas Price Fundamental Daily Forecast – Specs Need Bullish EIA Report to Resume Rally

Natural gas futures closed lower on Wednesday, ending this week’s winning streak. Profit-taking after a weather-related price surge drove the market lower as well as position-squaring ahead of Thursday’s weekly U.S. Energy Information Administration’s storage report. There was no change in the weather forecast so the price action clearly reflects the lack of buyers and that the market is still in the strong hands of the short-sellers.

September Natural Gas futures settled the session at $2.975, down $0.063 or -2.07%.

In other news, U.S. natural gas storage is expected to end the April-October injection season at a below-normal 3.7 trillion cubic feet (tcf) at the end of October. This compares with a five-year (2012-16) average of 3.9 tcf and falls well short of last year’s record high of 4.0 tcf at the end of the injection season.

Forecast

Most of the U.S. is expected to continue to experience hot high pressure. The cool spot on the map is the northeastern U.S. I think prices could spike higher if the heat creeps into this highly populated area.

According to natgasweather.com, for the July 11 -17 period, investors should continue to look for hot high pressure with highs of 90s and 100s dominating much of the country. There may be a cooling period across the Great Lakes and East this weekend, but the hot high pressure will retake key demand areas early next week, leading to much stronger than normal national demand. Overall, natural gas demand will be high to very high except for the northeastern U.S.

To recap, last week, the EIA report showed that total natural gas in storage currently stands at 2.888 trillion cubic feet. This is 9.0% lower than levels at this time a year ago but 6.5% above the five-year average for this time of year.

Thursday’s EIA weekly storage data report is expected to show a build of about 56 billion cubic feet for the week-ended July 7. This is lower than the increase of 64 bcf from a year ago and the five-year average rise of 72 billion cubic feet.

The charts indicate a sustained move over $3.006 will be bullish. If the buying is strong enough, we could see a move into $3.114 to $3.134. The market will turn bearish if $2.935 fails as support.