Natural Gas Price Fundamental Daily Forecast – Traders Looking for an EIA Injection of 105 Bcf

Natural gas futures are edging lower on Thursday as investors square positions ahead of today’s government weekly storage report. The market is looking for a triple-digit storage injection. On paper this looks bearish, but this week’s favorable shift in the weather-demand outlook may be off-setting these expectations.

At 12:38 GMT, July natural gas futures are trading $2.997, down $0.30 or -0.99%.

Bespoke Weather Services Outlook

In terms of demand for natural gas to cool homes and businesses, forecasts on Wednesday improved from earlier in the week, with more intense heat likely next week in the Midwest and East, Bespoke Weather Services said, and Natural Gas Intelligence (NGI) reported.

“The forecast has stepped warmer overall,” Bespoke said Wednesday. While cooler air is still expected in the nation’s midsection and in the Northeast over the looming Memorial Day weekend, any chills “look quite brief before upper level ridging sets up shop once again in the eastern U.S. This keeps total demand over the next 15 days as a whole above normal, even with the cooler period in play.

“The next couple of weeks fit perfectly into the theme we are expecting for the month of June as a whole,” the firm added. “While we get some variability, the bias of the pattern, on the national scale, is to the hotter side of normal, with above normal heat in the East, and out West, and some weakness in the central U.S.,” Bespoke said.

The firm said that, for the July contract’s initial run as the prompt month, “much depends” on Thursday’s U.S. Energy Information Administration (EIA) storage report for the week ended May 21.

Energy Information Administration Weekly Storage Report

NGI is reporting a Bloomberg poll showed a median estimate of 106 Bcf. Predictions ranged from 99 Bcf to 109 Bcf. Reuters guesses ranged from injections of 96 Bcf to 110 Bcf, with a median build of 106 Bcf. The Wall Street Journal survey predicts an average build of 101 Bcf. Estimates ranged from increases of 92 Bcf to 109 Bcf.

NGI’s model is calling for a 107 Bcf injection.

The estimates compare with a 105 Bcf increase in storage a year earlier and a five-year average injection of 91 Bcf.

Daily Outlook

Technically, the main trend is down. The key area the bulls have to overcome is $3.054 to $3.089. On the downside, the key support is $2.895 to $2.821.

The new weather forecasts are expected to be supportive, but in order to drive prices back above the psychological $3.000 level, the EIA report will have to come in under 100 Bcf.

An EIA report coming in at 101 to 105 is likely to lead to further consolidation. A number above 105 could drive the market into $2.895 to $2.821.