Natural Gas Price Fundamental Daily Forecast – Trader Reaction to $5.024 Sets the Tone Ahead of EIA Report

Natural gas futures are edging higher on Thursday shortly before the release of the government’s weekly storage report at 15:30 GMT. Technically, the market is trading on the weak side of a key level at $5.024, suggesting a slight downside bias. Fundamentally, the selling is being fueled by profit-taking and expectations for a sizable storage increase for mid-November.

At 12:33 GMT, January natural gas futures are trading $5.001, up $0.087 or +1.77%.

US Energy Information Administration Weekly Storage Report

Today’s EIA weekly storage report is expected to show a build in the mid-20’s, according to Natural Gas Intelligence (NGI). This would be a bearish development relative to the historic norm of modest withdrawals from storage at this time of year.

According to NGI, a Reuters poll of analysts found estimates ranging from injections of 18 Bcf to 33 Bcf, with a median build of 25 Bcf. Estimates in a Bloomberg survey spanned increases of 19 Bcf to 28 Bcf, with a median of 24 Bcf. NGI’s model is predicting a 23 Bcf build.

The five-year average for the week, however, is a withdrawal of 12 Bcf, according to EIA.

Short-Term Weather Forecast

According to NatGasWeather for November 18 – November 24, “A chilly weather system will track across the Midwest today with rain, snow, and frosty lows of 20s to 30s. However, most of the rest of the U.S. will be mild and dry with highs of 60s to 80s for light demand.

The Midwest system will race across the East Friday for a bump in national demand before easing again this weekend as a mild/warm break follows with highs of 50-60s.

Early next week will bring another chilly weather system across the northern U.S. for a swing back to stronger demand, although continued mild to warm over the southern U.S.

Overall, national demand will be moderate.”

Daily Forecast

The main trend is down according to the daily chart. A trade through $4.811 will signal a resumption of the downtrend. The daily chart shows there is plenty of room to the downside with $4.009 the next major support level.

The main range is $4.009 to $6.667. Its 50% to 61.8% retracement zone is $5.338 to $5.024. This zone is controlling the near-term direction of the market.

At this time, the market is trading on the weak side of this retracement zone, giving it a downside bias. Technically, natural gas will have to overcome resistance at $5.338 before we can start thinking about the long side again.