Natural Gas Price Fundamental Weekly Forecast – Short-Term Outlook Mixed; Mid-to-Long-Term Outlook Bullish
Natural gas futures closed higher last week after recovering from a ‘technical setback’ that drove prices into their lowest level since September 8. The weakness was fueled by reports of milder temperatures and some improvements in the damage from Hurricane Ida, but actually it was overvalued for this time of the year.
Bullish traders know the mid-to-long-term fundamentals are favorable for higher prices later in the year, but they weren’t going to pay up this close to the start of injection season. So prices retreated to near a value area at $4.867 to $4.649 before new value-seeking buyers stepped in at $4.879 to stop the price slide.
Last week, December natural gas futures settled at $5.315, up $0.057 or +1.08%.
At the end of the week, Natural Gas Intelligence (NGI) added that natural gas futures ended the week higher as the potential for supply constraints outweighed mild autumn weather and modest near-term domestic demand. Impending front-month expiration also factored in, analysts said.
Energy Information Administration Weekly Storage Report
The U.S. Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 76 billion cubic feet (Bcf) for the week ended September 17. That was larger than the average increase of 70 Bcf forecast by analysts polled by S&P Global Platts.
A consensus of experts predicted a build between the mid-70s to low 80s Bcf.
NGI reported that a Reuters survey ranged from injections of 58 Bcf to 82 Bcf, with a median build of 76 Bcf. Bespoke predicted a 75 Bcf increase. NGI’s model called for an 82 Bcf injection.
Last year, the EIA recorded a 70 Bcf injection for the similar week, while the five-year average injection is 74 Bcf.
Total Stocks now stand at 3.082 trillion cubic feet (Tcf), down 589 Bcf from a year ago and 229 Bcf below the five-year average, the government said.
Weekly Weather Outlook
According to NatGasWeather for “National demand will remain light this week as highs of 60s to 80s rules most of the U.S. and with very little coverage of highs into the 90s. Overall, national demand will be low to very low into the foreseeable future.
The major fundamentals remain bullish. They include modest production ahead of winter in the United States, as well as the potential for precariously low storage levels in Europe and parts of Asia. NGI also reported that U.S. liquefied natural gas (LNG) exports to fuel foreign energy needs have soaked up more supply this year than in the past, adding to imbalance worries.
New injections over the near-term and milder temperatures could keep a lid on prices this week, but the market remains well-supported so buyers are likely to continue to come in on breaks.