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Natural Gas Prices Forecast: EIA Storage Data Reveals Market Pulse

By:
James Hyerczyk
Published: Sep 28, 2023, 11:24 GMT+00:00

Traders anticipate a significant natural gas build in today's EIA storage report amid lower US demand due to shifting weather patterns.

Natural Gas Prices Forecast

In this article:

Highlights

  • Traders await the US government’s weekly storage report.
  • EIA data places working gas storage at 3,269 Bcf, within the typical five-year historical range.
  • Recent weather patterns, as described by NatGasWeather, hint at subdued gas demand this week.

A Glimpse into NatGas Market Dynamics

The anticipation in the market is palpable as traders keenly await today’s US government weekly storage report for US natural gas futures. If the consensus holds true, we could be looking at a build of 90 Bcf – a significant jump from last week’s 64 Bcf.

Current data from the EIA reveals that working gas in storage is at 3,269 Bcf, sitting comfortably within the five-year historical range. Stocks were 410 Bcf higher than last year at this time and 183 Bcf above the five-year average of 3,086 Bcf.

Changing Weather and its Implications

While the southern US basks in warmth, the rest of the country will experience milder temperatures. According to NatGasWeather, this translates to a generally low demand for gas over the coming week.

Market Recap: Treading Highs and Lows

Wednesday was a testament to the volatile nature of gas futures, as they soared nearly 4% to touch a one-week high. The price movement was attributed to heightened demand forecasts and a slip in daily production. On a more granular level, futures for November stood at $2.90 per mmBtu, reflecting the market’s recent inertia and reduced volatility.

Supply and Demand Dilemma

September saw an average gas output in the US’s lower 48 states drop slightly to 102.0 bcfd. Despite this, meteorologists predict warmer than usual weather for early October, hinting at mild demand. Interestingly, US gas demand is forecasted to inch upwards, supported by an increase in LNG and pipeline exports.

Market Sentiment and Outlook

The gas futures market reflects a cautious optimism. Recent trends, especially the resilience shown on Wednesday, suggest slightly bullish sentiment. However, external factors such as weather conditions and global demand dynamics could influence future trajectories.

In other words, during the “shoulder season”, where huge storage builds are possible, we’re not expecting any major prices spikes to the upside unless there is corresponding bullish news like an unexpected jump in LNG demand.

Technical Analysis

Daily Natural Gas

The current daily price of natural gas stands at $2.893, slightly higher than the previous day’s close at $2.899. This indicates a modest uptick in the commodity’s value.

In terms of moving averages, the 200-Day moving average is at $2.795, while the 50-Day moving average is slightly lower at $2.668. The current price is above both these averages, suggesting a potential bullish trend.

The 14-Day RSI reading of 60.31 falls into the neutral zone, indicating balanced momentum. It’s worth noting that readings below 50 suggest weakened momentum, while values above 50 signify stronger momentum.

Examining support and resistance levels, we find minor support at $2.892 and main support at $2.699. On the upside, there’s minor resistance at $3.002, while there’s no main resistance level currently defined.

Considering the trend lines, breaking above the resistance at $2.843 could trigger an acceleration to the upside, while a drop below the support at $2.619 might lead to a downside acceleration.

In conclusion, the technical analysis suggests a cautiously bullish sentiment for natural gas. The current price trading above both moving averages and a neutral RSI indicate potential upward momentum. However, market participants should closely monitor support and resistance levels and trend lines for potential trend shifts.

Additionally, keep in mind that we just rolled from the October to November futures contract so it may take a few days for technical traders to absorb the new prices.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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