Natural Gas Price Fundamental Daily Forecast – Today’s EIA Report Could Challenge 2018 Record Draw of 359 Bcf

James Hyerczyk
Published: Feb 25, 2021, 14:05 GMT+00:00

Traders are saying that today’s EIA report will finally be enough to erase the surplus to the five-year average and create a deficit of 125-175 Bcf.

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Natural gas futures are inching higher shortly after the regular session opening on Thursday and ahead of the release of the government’s weekly storage report at 15:30 GMT. Forecasts calling for milder temperatures continue to weigh on prices. Additionally, spot gas prices were mixed again. NGI’s Spot Gas National Average dropped 2.5 cents to $2.750.

At 13:38 GMT, April natural gas futures are trading $2.814, up 0.019 or +0.68%.

In other news, production continued to recover, although it is still below normal daily volumes from before last week’s record freeze-offs, Natural Gas Intelligence (NGI) said. In the Permian Basin, production is nearing 11 Bcf, still down from the 12.4 Bcf/d high before the cold air started moving into the region but far above the 3.8 Bcf low seen last Tuesday (Feb. 16).

NGI also said liquefied natural gas (LNG) demand continued to recover, and on Wednesday feed gas volumes had crossed back above 10 Bcf. A backlog of empty LNG vessels in the Gulf of Mexico had been growing since Friday, but appeared to be leveling off as the week got underway.

Short-Term Weather Outlook

According to NatGasWeather for February 25 to March 3, “A cold front will slide down from the Plains today with showers and chilly lows of 20s to 30s. A second colder system will sweep across the Midwest, Great Lakes, and Northeast with rain, snow, and frosty lows of 0s to 20s for stronger national demand. High pressure will build across the central, southern, and eastern U.S. this weekend with highs of 50s to 70s for a return to light national demand. However, a cold shot will push into the Midwest/Great Lakes mid-next week with chilly lows of -0s to 20s for a modest bump in national demand.”

US Energy Information Administration Weekly Storage Report

The EIA releases its weekly storage inventory report at 15:30 GMT on Thursday.

NGI is reporting a Bloomberg survey of Bloomberg survey of eight analysts produced estimates ranging from a draw as low as 301 Bcf to one as steep as 350 Bcf, with a median pull of 334 Bcf. A Wall Street Journal poll had a tighter range of predictions, with an average draw of 334 Bcf. NGI’s model projected a much smaller draw of 287 Bcf.

Daily Forecast

Although some professionals may have closed the books on winter as the warm weather returned following last week’s Arctic freeze, traders are saying that today’s EIA report will finally be enough to erase the surplus to the five-year average and create a deficit of 125-175 Bcf.

EBW Analytics Group said, “With the deficit likely to grow quickly in March, support near $2.77 could prove difficult to break.”

NatGasWeather says “Today’s (EIA) report is expected to be under the record draw of -359 in January 2018. They also said they see ways this draw surpasses larger than 2018 due to larger losses in production from freeze-offs.

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About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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