Natural Gas Price Fundamental Weekly Forecast – EIA Report Expected to Show 105 Bcf Build

Natural gas futures posted a gain last week despite a relatively large build in storage. Buyers came in strong on a break toward a series of bottoms at $2.714, $2.680 and $2.605. Not only were they defending these bottoms, but they were also reacting to the storage report that came in below the consensus forecast.

July Natural Gas futures settled at $2.825, up $0.084 or +3.06%.

The price action last week suggests some investors believe the market will have trouble filling in the current supply gap before the start of the summer cooling season. The current injection season began about a month late which created a supply deficit due to extended high winter demand.

According to the U.S. Energy Information Administration, supply rose by 89 billion cubic feet for the week-ended May 4, lower than the 92 billion forecast by analysts at S&P Global Platts. However, the figure was above the 75 Bcf averaged over the past five years.

Currently, national stocks sit at an estimated 1.432 Trillion Cubic Feet, a 26.6% deficit to the five-year average of 1.952 Tcf, according to the EIA data.

Forecast

The weather is likely to continue to control the price action this week since there are mixed reports coming in.

Until May 17, NatGasWeather.com is saying, “Weak weather systems will bring showers and cooling across the northern U.S. the next several days with highs mainly in the 40s to 60s. It remains warm with 70s and 80s over the middle of the country, while very warm over the southern U.S. with upper 80s to 90s, with locally 100s over the Southwest. There will be cooling into the west-central U.S. this weekend, but still quite warm over most of the southern and east-central U.S. with 70s to lower 90s. This week will continue with weak weather systems across the far northern U.S. and warm to very warm over most of the rest of the country. Overall demand will be low to locally moderate.”

Traders are saying that the EIA will report on Thursday a storage build of 105 Bcf for the week ending May 11.