Natural Gas Price Fundamental Daily Forecast – This Week’s Injection Could Be Five-Times Five-Year Average

Natural gas futures are trading lower on Monday as downside momentum threatens to challenge last week’s low amid mild weather forecasts and warnings of a possible triple digit injection in this week’s government storage report. Additionally, for the week-ending April 9, natural gas speculators in four major Nymex and Intercontinental Exchange markets cut their long positions by 27,099 contracts in the week to 150,393, according to the Commodity Futures Trading Commission.

At 10:10 GMT, June natural gas futures are trading $2.685, down $0.019 or -0.70%.

Short-Term Weather Outlook

According to NatGasWeather for April 12-18, “A weather system will sweep across the Great Lakes and East early this week with heavy showers and slight cooling. A warm break will follow Wednesday to Friday over the Great Lakes, Ohio Valley and East with 60s and 70s. The southern and western US will be warm with highs of 70s to 90s, apart from the slightly cooler and unsettled Northwest. Another weather system/weak cool shot will impact the central US late this week, then across the East next weekend although still quite comfortable with mostly light national demand continuing. Overall, national demand will be moderate to low early in the week, then low.

EIA Recap

According to the EIA, natural gas in U.S. storage facilities increased 25 Bcf to 1.155 Tcf in the week-ending April 5. The injection was smaller than the consensus estimates, which called for a 33 Bcf injection.

However, the actual injection of 29 Bcf was trimmed due to an EIA reclassification of working gas stocks comprising about 1 Bcf in the Pacific region and around 2 Bcf in the South Central salt-dome facilities.

Nonetheless, the build was still bearish compared with a 20 Bcf withdrawal reported in the corresponding week in 2018 as well as the five-year average injection of 5 Bcf, according to EIA data.

As a result, stocks were 183 Bcf, or 13.7%, under the year-ago level of 1.338 Tcf and 485 Bcf, or 29.6%, below the five-year average of 1.640 Tcf.

Daily Forecast

Downside momentum on the daily chart has put the June natural gas futures contract in a position to take out the last main bottom at $2.675. This will reaffirm the downtrend and put the market in a position to challenge the February 7 main bottom at $2.647, followed by the low for the calendar year at $2.623.

From a longer-term perspective, taking out $2.686 will also put the market on the weak side of a weekly retracement zone. This will put the market in a bearish position.

On the upside, near-term resistance is $2.710 to $2.721.

Expectations of increasing injections could be driving the price action today. “Continued loose balances point to another hefty injection versus the five-year average next week as well,” according to Bespoke.

Last week, Tudor, Pickering, Holt & Co. said there was a potential for the EIA to report a 100 Bcf-plus build, which would be five times the five-year average. Most analysts, however, are estimating a build closer to around 90 Bcf.