Natural Gas Price Fundamental Daily Forecast – Weakening Cold Spell Ahead of EIA Report Weighing on Prices

A consensus of estimates are pointing to a build of around 45 Bcf in today’s U.S. Energy Information Administration (EIA) weekly storage report, due to be released at 15:30 GMT, for the week-ending November 1.
James Hyerczyk
EIA Natural Gas Report

Natural gas futures are trading sharply lower on Thursday ahead of today’s government weekly storage report. The weakness has erased three days of gains, putting the market in a position to fill-in Monday’s gap higher opening. Traders are saying that short-term “overbought” technical conditions and a slight shift in the weather forecasts are the catalysts behind the selling pressure.

At 12:36 GMT, December natural gas futures are trading $2.782, down $0.046 or -1.63%.

U.S. Energy Information Administration Weekly Storage Report

A consensus of estimates are pointing to a build of around 45 Bcf in today’s U.S. Energy Information Administration (EIA) weekly storage report, due to be released at 15:30 GMT, for the week-ending November 1.

A year-ago the EIA reported a 63 Bcf injection, which compares with a 57 Bcf five-year average.

Bloomberg analysts are calling for a median prediction of 45 Bcf, with estimates ranging from 31 Bcf to 51 Bcf. The ICE EIA Financial Weekly Index futures settled Tuesday at 43 Bcf. Natural Gas Intelligence (NGI) is calling for a build of 44 Bcf. My estimate is for a build of 46 Bcf.

Energy Aspects issued a preliminary estimate for a 40 Bcf build for the period ended November 1. Analysts at Tudor, Pickering, Holt & Co (TPH) called for a 47 Bcf build for this week’s EIA report. An injection in this range is “not materially different from norms” around 56 Bcf, the TPH team said.

Short-Term Weather Outlook

According to NatGasWeather for November 7 to November 13, “A strong cold shot will continue to drop down the Plains and into Texas and the South today with increasing showers. The system will stretch across the east-central US with increasing rain and snow as it tracks into the East Coast tonight and Friday. With lows of 0s to 30s behind the cold front across the Plains, Midwest, and Northeast, national demand will jump in the days ahead. The rest of the southern U.S. and the West will be mostly comfortable with highs of upper 60s to 80s besides the cooler Northwest. After a brief break between cold shots late this weekend, an Arctic blast will arrive next week with lows of -0s to 20s for very strong demand. Overall, high demand becoming very high next week.”

Daily December Natural Gas

Daily Forecast

Prices are under pressure early Thursday because of profit-taking and position-squaring ahead of today’s EIA report. Furthermore, some traders are beginning to question the strength of the current cold spell after U.S. and European weather models “suggested that the intensity of cold could be less than what’s in the current forecasts,” according to Bespoke Weather Services.

The early price action suggests a short-term top may be forming, but this is not likely to be a trend-changing event. If the selling pressure persists then look for a minimum correction into the short-term retracement zone at $2.740 to $2.701. Since the main trend is up, buyers could step in on a correction into this potential support zone.

On the upside, another breakout over $2.905 could create enough upside momentum to challenge the late May top at $3.009. However, if $2.701 fails as support then the selling could extend into another major retracement zone at $2.647 to $2.585.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US