FXEMPIRE
All

Natural Gas Price Fundamental Daily Forecast – Wide Range of EIA Guesses Should Trigger Volatile Reaction

Look for volatility after the release of the EIA report because I have seen injection estimates that have been all over the map. The low end of the estimate shows a 48 Bcf build. Others are saying 68 Bcf is the number. Reuters analysts expect natural gas inventories to rise by 94 Bcf. Because of the wide range of guesses, we could see a hesitation in the trade shortly after the release of the data. After that we could see a wild two-sided trade.
James Hyerczyk
Natural Gas
Natural Gas

The strong upside momentum driven by aggressive speculative buying and short-covering by bearish traders caught on the wrong side of the market spiked natural gas prices higher for a third day on Wednesday. Early in the session on Thursday, the market is being underpinned again but yesterday’s high remains intact. Volume and volatility are light ahead of today’s U.S. Energy Information weekly storage report.

At 0730 GMT, November Natural Gas futures are trading $3.245, up $0.015 or +0.46%.

Going into the EIA report traders are keying in on three major issues.

Firstly, uncertainty over the in-service of a few major pipelines is making industry professional nervous about a supply shortage heading into the winter season.

Secondly, traders are worried that another low storage build will come in below the five-year average

Thirdly, late season cooling demand in the southern U.S. is driving up spot gas prices.

Forecast

Today’s EIA report is expected to show an injection of 95 Bcf. This is 51 Bcf larger than a year ago and 11 Bcf more than the 5-year average. Also look for the EIA to report 2,863 Bcf of working gas in storage for the week-ending September 28.

Look for volatility after the release of the EIA report because I have seen injection estimates that have been all over the map. The low end of the estimate shows a 48 Bcf build. Others are saying 68 Bcf is the number. Reuters analysts expect natural gas inventories to rise by 94 Bcf. Because of the wide range of guesses, we could see a hesitation in the trade shortly after the release of the data. After that we could see a wild two-sided trade.

With the market in the hands of speculators, it could turn at any time because speculators do book profits from time to time. Hedgers who have licked their wounds may try to stop this rally with some timed hedging.

Once again this move caught a lot of professionals off-guard because it came weeks early. There is some time for a pullback, however. Eventually the pipeline issues will be fixed, the power plants will resume normal activity, production will rise and traders will start paying attention to the weather pattern which suggests light to moderate demand.

I stand by my forecast for a correction before the heating season officially starts in November. But I’m going to need help from the EIA report today. Due to the wide range of estimates, anything can happen. Here’s hoping for a 100+ injection.

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