Natural Gas Price Fundamental Daily Forecast – Traders Looking for EIA Report to Show 66 bcf Build

Technical factors helped drive natural gas prices higher on Wednesday as buyers played the potentially bullish chart pattern formed on Tuesday. Gains were limited, however, as the market tested a major resistance area on the chart.

November Natural Gas futures settled at $3.061, up $0.061 or +2.03%.

Technical factors were the biggest influence on the price action on Wednesday. The weather forecast didn’t change and I don’t think traders were willing to commit in either direction ahead of Thursday’s U.S. Energy Information Administration report. The expiration of the October futures contract may have also dictated the direction of the November contract.

According to natgasweather.com for September 27 to October 3, “Warm high pressure will cover the eastern U.S. for another day with temperatures again quite warm and into the 80s and 90s.”

“This will be followed by cooling late in the week as a fresh weather system arrives with showers and thunderstorms.”

“The central U.S. and Texas will see showers and mild temperatures the next few days due to a stalled cool front. The West remains warm with highs of 70s to 90s”

“Overall, strong versus normal demand until Thursday, then near normal. Overall, high versus normal demand until early Thursday, then easing to moderate.

Forecast

Today’s U.S. Energy Information Administration report for the week-ending September 22 will be the first report to come in near average for this time of year since Hurricane Harvey hit the Texas Gulf Coast region the last week of August.

Traders are forecasting the storage report will show a build of about 66 billion cubic feet. That compares with a gain of 97 billion cubic feet in the preceding week, a build of 49 billion a year earlier and a five-year average rise of 84 billion cubic feet.

Although we could see some volatility if the EIA report is a complete miss, I continue to expect prices to remain range bound as the current weather forecasts suggest temperatures will be not too hot or not too cold over the near-term. This should lead to steady demand.

Major support remains $2.974, $2.957 and $2.954.

On the upside, buyers are likely to have trouble with a series of retracement levels at $3.055, $3.086, $3.094 and $3.122.

Holding above $3.055 will indicate the presence of buyers. Overcoming the price cluster at $3.086 to $3.094 will indicate the buying is getting stronger.

I can get excited about the rally on a sustained move over $3.122, but it’s going to take a dramatic shift in the weather pattern to trigger a move over $3.214.