Natural Gas Price Fundamental Daily Forecast – Traders Bracing for Another Above Average EIA Storage Build

Natural gas futures are trading flat on Thursday as investors await the release of the weekly government storage report. It is expected to show another above average build, helping to close the deficit to the 5-year average.

After hitting a one-month high on Monday, the market is now hovering just above a one-week low with bullish traders hoping enough demand can come in before the end of the month to set up conditions for a strong rally this winter.

At 12:04 GMT, December natural gas futures are trading $5.862, down $0.003 or -0.05%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $19.16, down $1.04 or -5.15%.

On Wednesday, the futures market fell about 4% on forecasts for less cold weather in late November amid continued volatility.

Analysts said the market also remained hyper focused on rumors the Freeport liquefied natural gas (LNG) export plant in Texas may not return in November since it has not yet filed its return to service plan with federal regulators, according to Reuters.

Demand for gas is expected to rise once Freeport returns. This will help stabilize prices.

NatGasWeather Predicts Wintry Weather

Looming cold fronts and flat production this week around 99 Bcf/d favored bulls, NatGasWeather noted, with forecasts Wednesday showing a substantial shift toward wintry weather beginning this weekend and extending through the middle of November.

This could help lead to increased demand once Tropical Storm Nicole passes through the Southeast this week. The storm, which is currently pounding Florida, is expected to create some demand destruction.

Energy Information Administration Weekly Storage Report

The EIA will release its weekly storage report at 15:30 GMT on Thursday, covering the week-ending November 4. It is expected to show another robust build.

According to Natural Gas Intelligence (NGI), estimates submitted to Reuters ranged from injections of 75 Bcf to 101 Bcf, with a median increase of 83 Bcf. Results of Bloomberg’s survey spanned 66 Bcf to 101 Bcf and landed at a median of 83 Bcf.

NGI is also predicting a build of 68 Bcf.

The estimates compare with a five-year average build of 20 Bcf. In the comparable week of 2021, the EIA printed a 15 Bcf increase.

Daily Forecast

December natural gas futures are currently trading on the weak side of a short-term technical retracement zone at $6.283 to $6.062. This puts it in a position to move lower with $5.345 the next major target.

The market will have to overtake $6.283 in order to attract enough new buyers to perhaps fuel the next rally.

Prices could also consolidate, building a potentially bullish support base in the process. This is very likely since the fundamentals are out of sync.

Demand is likely to remain weak until the cold weather arrives or the Freeport export plant begins producing liquefied natural gas.

Essentially, there is likely to be a downside bias as long as storage continues to build.