Natural Gas Price Fundamental Daily Forecast – Traders Shrugging Off Bearish EIA Report into Close

Natural gas futures are trading lower late in the session on Thursday after clawing back most of its earlier losses. The market is currently straddling a key short-term technical area that could determine its near-term direction.

Prices fell sharply following the release of a bearish government storage report at 15:30 GMT. The U.S. Energy Information Administration (EIA) on Thursday reported a withdrawal of 128 Bcf natural gas from storage for the week-ended January 22. The print was notably lighter than a week earlier and came in well below the mid-point of analysts’ estimates.

At 19:09 GMT, March natural gas futures are trading $2.691, down $0.011 or -0.41%.

US Energy Information Administration Weekly Storage Report

Ahead of the government storage data, NGI reported that Bespoke anticipated the EIA to report a draw of 140 Bcf for the week-ended January 22.

“Analysts are broadly expecting a triple-digit pull, though not as big of a decrease as reported a week earlier. EIA recorded a pull of 187 Bcf from storage for the week ended January 15, the largest decrease of the season,” NGI wrote.

“For the latest week, a Reuters poll found estimates ranging from withdrawals of 127 Bcf to 145 Bcf, with a median decrease of 138 Bcf. Bloomberg’s survey of analysts landed at a median decrease of 139 Bcf, with estimates ranging from pulls of 131 Bcf to 143 Bcf,” NGI said.

Short-Term Weather Outlook

According to NatGasWeather for January 28 to February 3, “A strong storm continues to bring heavy rain and snow to the West with cool highs of 30s to 50s. Cool to cold conditions will also cover much of the northern ½ of the U.S. the next few days with highs of 10s to 40s for strong demand. Demand would be more impressive if not for the southern U.S. mild with highs of 50s to 70s. National demand will ease late this weekend and next week to seasonal levels as high pressure builds across the central and southern U.S. with highs of 40s to 70s but still with slightly cool weather systems over the West and East.”

Short-Term Forecast

The direction of the market into Friday will be determined by how fast traders can put to bed today’s EIA report and shift their focus to next week’s report that is expected to show a steeper pull. Early estimates are calling for pulls of around 160 Bcf to 200 Bcf.

Technically, trader reaction to a retracement zone at $2.630 to $2.678 will set the tone into the close.

Look for a bullish tone to develop on a sustained move over $2.630 and for a bearish tone to develop on a sustained move under $2.630.