Natural Gas Price Fundamental Daily Forecast – Weather Driven Strength Ahead of EIA Report

Natural gas futures are trading higher on Thursday shortly before the release of the government’s weekly storage report. The catalyst behind today’s early strength is colder overnight trends in one of NatGasWeather’s models.

At 14:50 GMT, January Natural Gas is trading $6.752, up $0.145 or +2.19%. The United States Natural Gas Fund ETF (UNG) is at $20.56, up $0.47 or +2.34%.

NatGasWeather Sees Colder Temperatures, Higher Demand

As for changes in the overnight weather data, trends were mixed, with the American model losing demand but the European model trending colder, according to the firm.

“We expect this will continue as the weather models struggle in determining how much cold air will push into the U.S. Nov. 23-30,” NatGasWeather said.

The last week of November is expected to bring moderating temperatures versus “bullish” colder conditions over the next six days, the firm said.

Early EIA Weekly Storage Report Estimates

Thursday’s U.S. Energy Information Administration (EIA) weekly storage report is expected to show another relatively fat storage build.

NGI is reporting that early estimates for the week ended Nov. 11 submitted to Bloomberg ranged from 60 Bcf to 72 Bcf, with a median of 66 Bcf. Preliminary results of a Reuters’ poll landed at an average of 64 Bcf and spanned 51 Bcf to 78 Bcf.

These estimates compare with an injection of 23 Bcf a year earlier and a five-year average withdrawal of 5 Bcf.

Short-Term Outlook

We finally saw a breakout to the upside after nearly five days of sideways trading. But will it last?

NatGasWeather said, “The next result of the recent and coming pattern will be for deficits versus the five-year average to nearly flip to surpluses off today’s EIA report.”

Deficits should then widen back to more than 100 Bcf versus the prior five-year average on current cold conditions “before stalling or improving slightly on a more seasonal U.S. pattern” for late November, the firm added.

It looks like we’re setting up for more sideways price action until the weather turns decisively lower or Freeport LNG reopens.