Natural Gas Price Fundamental Daily Forecast – Strengthens Over $8.016, Weakens Under $7.713

Natural gas futures are edging higher on Friday after posting a strong rebound the previous session on the back of a smaller-than-expected government storage report and a jump in European gas prices on Russian supply concerns.

At 12:42 GMT, June natural gas futures are trading $7.855, up $0.116 or +1.50%. On Thursday, the United States Natural Gas Fund ETF (UNG) settled at $26.48, up $0.10 or +0.38%.

US Energy Information Administration Weekly Storage Report

The EIA said on Thursday that utilities added 76 billion cubic feet (Bcf) of gas to storage during the week ended May 6. This is slightly below the 5-year average of 82 Bcf.

According to survey averages, the EIA storage report was expected to show an injection of 80 Bcf. Ahead of the report, Natural Gas Intelligence (NGI) reported that analysts were expecting an injection in the low 80s Bcf. Bloomberg’s survey showed estimates of 64 Bcf to 85 Bcf, with a median of 81 Bcf.

Working gas in storage was 1,643 Bcf, according to EIA estimates. Stocks were 376 Bcf less than last year at this time and 312 Bcf below the five-year average of 1,955. At 1,643 Bcf, total working gas is within the five-year historical range.

Short-Term Weather Outlook

According to NatGasWeather for May 13-19, “Texas and the South Plains remain very warm to hot with highs of 80s and 90s, while the West into the Northern Plains remains mild & unsettled as weather systems track through.

It’s also warm from the Southern Great Lakes to the South as high pressure rules with highs of 80s to lower 90s.

The East will be nice with 70s and 80s despite a weather system off the coast that’s slowly tracking into the Southeast with showers.

For late this week through mid-next week, the northern U.S. will be comfortable with highs of 60s and 70s as late season weather systems track through, while the southern U.S. remains very warm to hot with highs of 80s and 90s, besides 100s in the Southwest deserts into West Texas.”

Daily Forecast

Excessive heat over the next two weeks will make it difficult to close the current storage deficit even if output increases. This is supportive for higher prices.

Technically, June natural gas futures are testing a short-term retracement zone at $7.713 to $8.016. The latter is a potential trigger point for an acceleration to the upside.

Since the longer-term trend is up and expected to be supported by strong fundamentals, we’re looking for bullish traders to continue to support the market on breaks back into support.

On the upside, a sustained move over $8.016 could bring in aggressive traders willing to buy strength.