Natural Gas Prices Forecast: Futures Steady, EIA Storage Report Looms

Highlights

• US natural gas futures stabilize after technical reversal.
• Potential short-term rally in natural gas market indicated.
• Market eyes EIA storage data for future price direction.
• Analysts predict -52 Bcf draw in upcoming EIA report.

US Natural Gas Futures Hold Steady Post-Reversal

US natural gas futures remained unchanged on Thursday, following a significant technical closing price reversal the previous session. This stability comes despite prior oversold conditions signaling a potential short-term counter-trend rally.

Counter-Trend Rally and EIA Report

The market’s reaction to the recent reversal is crucial, with its duration depending on the underlying trigger – weather-related or technical. Upcoming weekly storage data from the US Energy Information Administration (EIA) could further influence market sentiment. The report is due to be released at 15:30 GMT.

Storage Data and Weather Forecasts

The upcoming weekly storage report from the US Energy Information Administration (EIA) is pivotal. Analysts, expecting a draw of -52 Bcf, project this could lead to increased surpluses, diverging from the five-year average draw of -81 Bcf, according to NatGasWeather. This deviation is attributed to warmer-than-normal temperatures across the US, affecting natural gas storage levels.

Recap of Wednesday’s Market Movement

Wednesday saw a modest rise in natural gas futures, driven by increased demand forecasts and high gas flow to LNG export plants. Despite this, the market sentiment remained cautious due to mild weather predictions and robust storage levels.

Supply and Demand Outlook

With record gas production and ample storage, the market signals a bearish outlook for the upcoming winter. Long-term forecasts, however, suggest rising prices due to growing demand and new LNG export plants. Current data shows a decline in overall US gas demand, reflecting the impact of mild weather conditions.

The short-term forecast for the US natural gas market appears cautiously bearish, influenced by weather patterns, storage data, and LNG export dynamics. The market remains watchful of future demand trends and potential shifts in weather conditions.

Technical Analysis

Natural Gas is currently exhibiting potentially bullish sentiment in the short term. The market is significantly below both the 200-day and 50-day moving averages, at 3.284 and 3.207 respectively, which generally suggests a bearish trend.

While this setup presents a possibility for bullish movement, it’s important to note that a definitive bottom has not yet been established, indicating that caution and close monitoring of the market are essential in the short term.