Natural Gas Price Fundamental Daily Forecast – Traders Pricing in Low Triple-Digit EIA Report Build

Natural gas futures are trading slightly higher ahead of the release of the U.S. Energy Information Administration’s weekly inventories report at 14:30 GMT. The range is tight and volatility is relatively low following two straight days of selling pressure.

Today’s price action suggests investors are trying to defend the two main bottoms at $2.550 and $2.534. If they fail then sellers are likely to make a run at the psychological $2.500 level.

At 14:10 GMT, July natural gas futures are trading $2.567, up $0.008 or +0.31%.

The catalyst behind the selling pressure is worries over the latest government storage report that is expected to show another triple-digit injection. A delay in the return of hot temperatures is also weighing on prices as well as increasing production after an earlier-in-the-week setback.

U.S. Energy Information Administration Weekly Inventories Report

This week’s EIA report is expected to show a low triple digit build for the week-ending May 17.

According to Bloomberg, the median prediction is for a 104 Bcf build, with a range of 99 Bcf to 112 Bcf. Reuters is also predicting a 104 Bcf build, with a range of 100 Bcf to 112 Bcf. The ICE EIA Financial Weekly Index settled at 102 Bcf, while Natural Gas Intelligence is predicting a 105 Bcf build.

At this time last year, the EIA reported a 93 Bcf injection with the 5-year average coming in at 88 Bcf.

Short-Term Weather Outlook

NatGasWeather for May 22 to May 28 says, “Weather systems with rain, snow, and powerful thunderstorms will continue across the West and Plains with chilly lows of 30s and 40s. Texas to the Mid-Atlantic Coast will be very warm to hot with highs of mid-80s to 90s as high pressure strengthens, hottest over the Southeast. A mix of mild to warm from the Great Lakes & Northeast but comfortable most days from Chicago to NYC with highs of 60s to 80s. Overall, demand will be moderate due to hot conditions over the southern U.S.

Mid-Term Weather Forecast

Radiant Solutions says the six- to 10-day “features a warm change in the Eastern half, with any cooler adjustments being small and limited to parts of the West,” the forecaster said.

The 11-15 day outlook showed “broadly warmer than normal” conditions across the Lower 48. This comes as “heat is slower to wane in the Southeast,” Radiant said.

Daily Forecast

A bearish EIA report is likely to lead to a test of $2.550 to $2.534. If they fail then look for a move toward $2.500.

A bullish EIA report could drive prices back into a series of potential retracement zone resistance at $2.609, $2.619, $2.632 and $2.641.