Natural Gas Price Fundamental Daily Forecast – Two Week Models Showing Normal Temps

Natural gas futures failed to follow-through to the downside on Thursday after Friday’s steep sell-off. The move could’ve been fueled by position-squaring and profit-taking in front of the November 9, 2016 main bottom at $2.815 and today’s U.S. Energy Information Administration weekly storage report.

We’re seeing a slight follow-through to the upside early Friday with the August natural gas futures contract trading $2.903, up $0.018 or +0.62%, at 0638 GMT.

Prices are currently hovering around the four month low because bearish weather forecasts have chased away the speculative buyers.

According to updated weather reports from natgasweather.com, “overall natural gas demand will be high besides the northeastern U.S.” Essentially, this means that the weather models are showing temperatures are likely to be mostly normal in the eastern third of the U.S. until about July 21. Noticeably absent is the word “heat”, or the phrase “high pressure dome”.

Forecast

To recap last week’s EIA report, total natural gas in storage currently stands at 2.816 trillion cubic feet. This is 10.2% lower than levels at this time a year ago but 6.4% above the five-year average for this time of year.

Weekly storage data is expected to show a build of about 63 billion cubic feet for the week-ended June 30.

Last week, the report showed a build of 46 billion cubic feet, an increase of 39 billion a year earlier and a five-year average rise of 66 billion cubic feet.

August natural gas will plunge if the build is greater than 70 bcf. I think traders are going to give the report some leeway. A build under 57 will likely trigger a short-covering rally.

Be prepared for a two-sided trade like we saw two-weeks ago.