Natural Gas Price Fundamental Daily Forecast — US Prices Remain Elevated Ahead of EIA Storage Report

U.S. natural gas futures are edging lower on Thursday but remain buoyed by elevated gas prices in Asia and Europe. Domestic prices are being capped, however, by a delay in the restart of the Freeport export hub. Traders are now awaiting storage data from the government that will reveal the size of the domestic supply shortfall.

At 10:01 GMT, October natural gas futures are trading at $9.208, down $0.092 or -0.99%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $31.86, down $0.15 or -0.47%.

US Traders Being Guided by Elevated International Gas Rates

U.S. natural gas prices are currently trading lower for the week after reaching a 14-year high at $10 per MMBtu on Tuesday. Nonetheless, U.S. prices continue to be underpinned at multi-year levels due to elevated global gas rates, with contracts at $80 MMBtu in Europe and $56 MMBtu in Asia.

Heightened Volatility Remains the Theme

U.S. prices surged earlier this week after Russian state energy giant Gazprom said last week the country would halt natural gas supplies to Europe for three days at the end of the month via its main pipeline into the region.

The news spiked U.S. prices to $10 mmBtu on Tuesday, but prices quickly plunged after Freeport LNG announced its Texas plant would not return to operation until the end of November instead of the originally announced October deadline.

The Russian pipeline news is expected to remain a major source of volatility into at least early September because Gazprom cannot guarantee that the problem with delivery will be fixed in a timely manner.

Volatility could also be felt in the U.S. because the delay in bringing Freeport back from the outage could reduce the current projected shortfall in storage levels from 300 Bcf to 250 Bcf. The reduction in the shortfall could put significant downside pressure on U.S. natural gas futures.

Daily Forecast

Momentum may be shifting to the downside in the October natural gas futures market but this doesn’t mean the long-term bullish trend is changing. There may be some price adjusting to the downside, but not enough to change the long-term trend to down. It’s more likely to be treated as a buying opportunity in keeping with this year’s “buy the dip” theme.

Although today’s U.S. Energy Information Administration’s (EIA) weekly storage report is expected to come in above-average and perhaps ease some worries about a supply shortage in the winter, reports of sluggish production are expected to keep prices supported.

Ahead of today’s EIA storage report, due to be released at 14:30 GMT, Natural Gas Intelligence is reporting that a Reuters poll predicts a range of injections of 17 to 67 Bcf, with a median forecast of 60 Bcf. A Bloomberg survey had a slightly tighter range of estimates, with a median of 54 Bcf.