Natural Gas Price Fundamental Daily Forecast – Triple-Digit EIA Build Could Sink Prices into $7.213

Natural gas futures are edging lower on Thursday shortly before the release of the government’s weekly storage report.

According to a Reuters poll, U.S. utilities likely added a higher-than-usual amount into storage. It is expected to exceed both the build during the same week a year ago and the five-year average.

Traders are saying the size of the expected build could help put a dent in the 1 year and five year storage deficit.

At 11:50 GMT, November natural gas futures are trading $7.723, down 0.104 or -1.33%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $26.97, up $0.30 or +1.13%.

Short-Term Weather Outlook

According to NatGasWeather for September 22-28, “California and much of the West remain comfortable with highs of 60s to 80s as a weather system brings showers.

Hot high pressure continues to rule Texas, the South & Southeast with highs of 90s, while nice elsewhere with highs of 60s to 80s.

Mild weather systems will track across the Great Lakes and Northeast late this week and early next week with highs of mid-50s to 70s, while Texas and the South cools into the 80s to low 90s.

Overall, moderate national demand the next 2-days, then low after.”

EIA Weekly Storage Report:  Large Build Expected

Ahead of today’s Energy Information Administration (EIA) weekly storage report for the week-ended September 16, due to be released at 14:30 GMT, Natural Gas Intelligence (NGI) is reporting a consensus injection in the 90s Bcf.

According to NGI, the results of a Reuters poll ranged from predicted increases of 86 Bcf to 99 Bcf, with a median of 93 Bcf. Additionally, a Bloomberg survey spanned estimates of 80 Bcf to 104 Bcf, landing at a median expectation of an injection of 95 Bcf.

The estimates compare with the year-earlier injection of 77 Bcf and a five-year average of 81 Bcf.

A reading of 93 Bcf, for example, would lift stockpiles to 2.864 Trillion Cubic Feet (Tcf), about 6.7% below the same week a year ago and 10.7% below the five-year average.

The experts at NatGasWeather wrote, “Volatility has been extreme the past few weeks and we expect this will continue, aided by today’s EIA storage report, where survey averages suggest a build of 92-96.5 Bcf, larger than the 5-year average of 81 Bcf.

It was warmer than normal over the western, northern, and far eastern US, while a touch cool over the South and east-central US.

We expect a build of 101 Bcf. What’s also expected to impact trade is where a strengthening tropical cyclone in the Caribbean tracks, especially since some of the weather data forecasts it to arrive into the Gulf of Mexico next week, then into the US Gulf Coast after.”

Daily Forecast

The main trend on the daily chart is down based on the series of lower tops and lower bottoms. The main range is $5.465 to $10.040. The market is currently testing its 50% to 61.8% retracement zone at $7.753 to $7.213.

Trader reaction to $7.753 to $7.213 is likely to determine the short-term direction of the market.

Look for an upside bias to develop on a sustained move over $7.753 and for a downside bias to develop on a sustained move under $7.213.

As far as the EIA report is concerned, any triple digit read is likely to be bearish and could trigger an acceleration to the downside under $7.213.