Natural Gas Price Fundamental Daily Forecast – Weak Double-Digit Storage Build Raises Concerns

Natural gas soared on Tuesday after revised National Weather Service forecasts showed above-average temperatures consolidating over most of the country through both the six-to-10-day and eight-to-14-day periods.

July Natural Gas futures settled at $2.936, up $086 or +2.93%.

In other news, an early jump in cooling load and linger demand for heating boosted overall consumption for natural gas by 4% in the week to May 16, the U.S. Energy Information Administration said in its latest Natural Gas Weekly Update.

Forecast

Warmer weather should boost cooling demand, which would curtail the pace of weekly injections, meaning the current supply deficit may not be filled in time for the start of the summer cooling season.

This week’s EIA report is expected to show a build of low 80s to 92 Billion cubic feet during the week-ending May 18. This would slow down the rate of storage improvements, following the 106 Bcf injection during the week-ended May 11 which took total working gas stocks to 1538 Bcf.

Technically, the main trend is up according to the daily swing chart. The buying was strong enough to take out last week’s high at $2.901, confirming the uptrend and the March 13 top at $2.919, indicating the buying is getting stronger.

The market posted its highest close since January 31, putting the market in a position to challenge the January 30 main top at $3.010.

The strong rally also raised the nearest bottom to $2.804. A trade through this level will change the trend to down.

Prices could consolidate today because yesterday’s rally may have been enough of a reaction to the new weather forecast. We could also see limited price action ahead of Thursday’s EIA report.