Natural Gas Price Fundamental Daily Forecast – Stable as Traders Await the Next Major Catalysts

Natural gas futures are trading lower, but attempting to rebound from early session weakness on Friday. Forecasts calling for increased demand late June/early July are providing some support, while capping gains are reports of lower export levels and weather forecasts calling for less heat next week.

There is nothing in the news to suggest a major top is forming despite the inability to follow-through to the upside following a price spike to the upside early in the week. Traders seem to be downplaying yesterday’s confusing U.S. government storage report, which included a “reclassification” of stocks.

At 16:22 GMT, September natural gas futures are trading $3.248, down $0.012 or -0.37%.

Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 16 billion cubic feet for the week-ended June 11. The EIA said the data, however, included an adjustment to the week’s total to account for a reclassification of some gas stocks from working gas to base gas. Working gas is the volume of gas available in the market. The “implied flow for the week is an increase of 67 Bcf to working gas stocks,” the EIA said.

The EIA announced an implied build of 67 Bcf for the week, a few ticks below median estimates, but the reclassification created a huge headline miss that drove some traders to the sidelines.

Ahead of the report, analysts were looking for a lighter-than-usual storage injection with yesterday’s EIA inventory report.

NGI reported that a Bloomberg survey showed a median estimate for a 70 Bcf injection for the week-ended June 11. Responses ranged from 65 Bcf up to 76 Bcf. A Reuters poll of analysts, estimated ranges from a build of 64 Bcf to 76 Bcf, and a median injection of 73 Bcf.

NGI’s model predicted a 74 Bcf injection for this week’s report. Last year EIA recorded an 86 Bcf build for the similar week, and the five-year average is an injection of 87 Bcf.

Total stocks now stand at 2.427 trillion cubic feet (Tcf), down 453 Bcf from a year ago and 126 Bcf below the five-year average, the government said.

Short-Term Outlook

Looking ahead to next week, early estimates call for a modest build that reflects the intense heat cooking the western United States in June, according to NGI.

Bespoke Weather Services estimated a 72 Bcf injection for the week-ended June 18; the five-year average is 83 Bcf. “We remain on pace for a high-end hot June overall, ranking in the top five hottest in the historical record,” the firm said.

Forecasters, however, said cooling needs could ease some next week – after two weeks of elevated demand, NGI wrote.