Natural Gas Price Fundamental Daily Forecast – Will Have Trouble Sustaining Move Over $3.00 Without Hot Temperatures

Natural gas futures finished higher on Thursday, following the release of a government report that showed a smaller storage build than expected.

July Natural Gas futures settled at $2.945, up $0.060 or +2.04%.

According to the U.S. Energy Information Administration report, natural gas storage in the U.S. rose by 96 billion cubic feet (bcf) in the week-ended May 25. Traders were looking for about 100 Bcf with some estimates coming in as high as 107 Bcf.

That compared with a build of 91 Bcf in the preceding week, an increase of 81 Bcf a year earlier and a five-year average rise of 97 Bcf.

Total natural gas in storage currently stands at 1.725 trillion cubic feet (Tcf), according to the EIA.

That figure is 788 Bcf, or around 31.3%, lower than levels at this time a year ago, and 500 Bcf, or roughly 22.4%, below the five-year average for this time of year.

In other news, U.S. natural gas production in the lower 48 states rose to an all-time high of 88.8 billion cubic feet per day (bcfd) in March, up from the prior record of 87.7 bcfd in February, according to EIA’s 914 production report.

Output in Texas, the nation’s largest gas producer, increased 1.3 percent in March to 22.7 bcfd, the most since April 2016.

Forecast

On Thursday, the market rallied to $2.988, just short of the higher reached on Monday at $3.000. Taking out this level will signal a resumption of the uptrend.

Additional targets include the January 30 top at $3.010, the November 17 top at $3.012 and the November 13 top at $3.019. Overtaking this levels could trigger an acceleration into the October 23 main top at $3.043.

The weather services continue to forecast milder temperatures for the second week of June. This could lead to lower demand which may even lead to a triple digit injection in a couple of weeks.

Without hot weather, natural gas is likely to continue to test support zones at $2.899 to $2.877 and $2.858 to $2.826.

If heat returns, we’re likely to breakout over $3.000 on the way to at least $3.043.