Natural Gas Price Fundamental Daily Forecast – Volatile, Two-Sided Trade Likely Amid Major Demand Concerns

Natural gas prices are trading slightly lower on Friday but trying to claw back to unchanged following earlier losses. The market is being pressured by renewed short-selling and profit-taking following a recent run-up. Weighing on prices are rising COVID-19 cases in the United States, which threaten another round of demand destruction. Bullish traders are also lightening up positions following yesterday’s neutral government storage report.

At 12:24 GMT, August natural gas is trading $1.771, down $0.008 or -0.45%. This is up from an intraday low of $1.737.

Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 56 billion cubic feet for the week-ended July 3. That was mostly in line with the average increase of 55 billion cubic feet forecast by analysts polled by S&P Global Platts.

Total stocks now stand at 3.133 trillion cubic feet, up 685 billion cubic feet from a year ago, and 454 billion cubic feet above the five-year average, the government said.

Ahead of the report NatGasWeather said, “For today’s EIA weekly storage report, survey averages favor a build of +56-58 Bcf, slightly smaller than the 5-year average of +68 Bcf. It was hotter than normal over much of the eastern 2/3 of the U.S., while cooler than normal over most of the West.”

Short-Term Weather Outlook

According to NatGasWeather for July 9 to July 15, “Upper high pressure continues to stretch from Texas to the Great Lakes and across the Mid-Atlantic states and coast with very warm to hot highs of upper 80s to mid-90s. It’s also hot over much of the West with highs of 90s and 100s besides the cooler Northwest. Heavy showers continue over the Southeast as a weather system exits, although still warm & humid with highs of mid-80s to lower 90s.”

“A fresh weather system will push into the Great Lakes and Ohio Valley this weekend with comfortable highs of 70s to 80s, although countered by very hot conditions over Texas, the Southwest and Southern Plains with 100s. Overall, national demand will be high.”

Daily Forecast

Traders are going to be weighing the hot weather demand against the possible demand destruction from the surge in COVID-19 cases. This could create volatile, two-sided trading conditions.

The main trend is up according to the daily swing chart, but a short-term range has formed after the recent seven day rally. A trade through $1.924 will signal a resumption of the uptrend. The main trend will change to down on a move through $1.517.

The minor trend is also up. It will change to down on a trade through $1.655. This will shift momentum to the downside.

For a look at all of today’s economic events, check out our economic calendar.