Natural Gas Price Fundamental Daily Forecast – Traders May Shrug Off EIA, Shift Focus to Next Week’s Heat

Natural gas futures are trading lower shortly before the release of the U.S. government’s weekly storage report on Thursday. The market is under pressure for a second session on expectations that the report will show a storage build near normal despite hotter than usual weather during the last half of June.

Traders also blamed the slightly bearish outlook on the shutdown of Freeport’s liquefied natural gas (LNG) export plant in Texas, which left more fuel available for utilities to stockpile.

At 13:14 GMT, August natural gas futures are trading $6.432, down $0.066 or -1.02%. On Wednesday, the United States Natural Gas Fund settled at $21.90, down $0.75 or -3.31%.

The market is also under pressure despite a fall in daily output this week and weather forecasts calling for hotter than normal temperatures through at least the first week of July. This may be enough to keep the market underpinned, but may not be enough to spike prices higher, which many speculative bulls are betting on.

Short-Term Weather Forecast

According to NatGasWeather for June 30 – July 6, “Nice to warm conditions will rule most of the northern 1/3 of the US as weak weather systems bring showers and comfortable highs of 60s to 80s.

The southern 2/3 of the US will be very warm to hot with highs of upper 80s to 100s, hottest California to Texas, but also with highs of 90s up the East Coast.

There will be heavy showers along portions of the Texas Coast Thursday-Saturday as a weak tropical disturbance tracks slowly inland.

Overall high national demand into the foreseeable future.”

Energy Information Administration Weekly Storage Report

“For today’s EIA storage report, survey averages were tightly clustered at +74-75 Bcf, near the 5-year average of +73 Bcf. It was hotter than normal over most of the interior US, while slightly cool over the West and East Coasts. We expect a build of +75-76 Bcf, although tricky due to the Juneteenth Holiday and inconsistent wind energy generation last week,” according to NatGasWeather.

According to Reuters, analysts forecast U.S. utilities added 74 billion cubic feet (bcf) of gas to storage during the week ended June 24, about even with 73 Bcf in the same week last year and a five-year (2017-2021) average increase of 73 Bcf.

Daily Forecast

Technically speaking, the market is currently testing the major support zone at $6.587 to $5.865. Inside this range is a minor support area at $6.448 to $6.357.

Overcoming $6.587 will be a sign of strength. Taking out $6.833 will change the trend to up. However, the trigger point for an acceleration to the upside is $7.022.

A failure to hold a minor support level at $6.357 will be a sign of weakness. This could trigger an acceleration into $6.062, followed by $5.865.

Fundamentally, the EIA report, due to be released at 14:30 GMT, has to come out in the upper 60’s to trigger an acceleration to the upside, in my opinion. The 80’s would be bearish.