Natural Gas Price Fundamental Daily Forecast – Supported by Deficit Concerns, Pressured by Low Demand

Volatility hit the natural gas market on Thursday following the release of the U.S. Energy Information Administration’s weekly storage report. Despite the two-sided trade, the market remained inside its two-week range.

July Natural Gas settled at $2.930, up $0.034 or +1.16%.

The EIA reported that domestic supplies of natural gas rose by 92 billion cubic feet for the week-ended June 1. The increase was in line with average expectations of analysts surveyed by S&P Global Platts.

However, since estimates were all over the map going into the report, some investors read the news as bullish, sending prices higher, while others saw it as a bearish number and drove prices lower.

Total stocks now stand at 1.817 trillion cubic feet, down 799 billion cubic feet from a year ago, and 512 billion below the five-year average.

The injection was 10.7% less than the 103 Bcf build reported in the corresponding week in 2017 as well as 11.5% under the five-year average injection of 104 Bcf, according to the EIA data.

As a result, stocks were 30.5%, below the year-ago level of 2.616 Tcf and 22%, under the five-year average of 2.329 Tcf.

Forecast

With the report out of the way, investors are going to shift their focus to the week-end weather and perhaps early estimates for next week’s EIA report. Most professionals are already looking 10-14 days out.

The early price action on Friday has natural gas trading lower. At 0731 GMT, July Natural Gas is trading $2.902, down 0.027 or -0.96%.

Technically, natural gas is rangebound.

The main range is $2.722 to $3.000. Its 50% to 61.8% retracement zone is $2.858 to $2.826. This zone is the major downside target.

The intermediate range is $2.804 to $3.000. Its retracement zone at $2.899 to $2.877 has been providing support all week.

The short-term range is $3.000 to $2.864. Its retracement zone at $2.932 to $3.948 is acting like resistance.

The market is rangebound because the injections and the weather reports have been solid enough to prevent speculative buyers from driving the market through resistance. At the same time, the deficit is still large enough to provide support.

The short-term outlook for the market will change on a sustained move over $3.000 and a sustained break under $2.804. Otherwise, look for buyers to continue to come in on the dips and sellers on the rallies.