Natural Gas News: Traders Anticipating Bearish Miss in EIA Report

Natural Gas Futures Weaken Ahead of EIA Storage Report

U.S. natural gas futures traded lower early Thursday as traders awaited the Energy Information Administration’s (EIA) weekly storage report, due to be released at 14:30 GMT. The market is poised to challenge Monday’s closing price reversal bottom at $2.268, followed by the April 26 main bottom at $2.251, indicating a bearish chart pattern.

At 13:16 GMT, Natural Gas Futures are trading $2.287, down $0.042 or -1.80%.

EIA Storage Report Expectations

Survey averages suggest a build of +54-58.5 Bcf, with the most notable expectation at 58.5 Bcf. However, there’s potential for a bearish miss due to the Fourth of July holiday, stronger wind energy generation, and lighter week-over-week cooling degree days (CDDs).

Weather Impact on Natural Gas Demand

According to NatGasWeather, hot high pressure is set to dominate much of the U.S. from July 11-17, with highs ranging from upper 80s to 110s. The West is expected to experience dangerous heat with temperatures reaching 100-113°F. The Great Lakes and Ohio Valley remain cooler exceptions due to remnants of Hurricane Beryl.

LNG Export Terminal Status

Feed gas flows to U.S. liquefied natural gas (LNG) export terminals are set to rise by 0.6 Bcf/d to around 11.6 Bcf/d on Thursday, according to Wood Mackenzie data. However, the Freeport LNG terminal in Texas, the third-largest U.S. LNG facility, remains offline for the fifth consecutive day following its shutdown before Hurricane Beryl’s landfall.

Market Forecast

The natural gas market outlook appears bearish in the short term. The combination of potentially bearish storage data, the continued offline status of the Freeport LNG terminal, and the recent price action suggest downward pressure on futures prices. Traders should watch for a potential test of key support levels at $2.268 and $2.251. However, the upcoming heatwave across much of the U.S. could provide some support to prices if it leads to increased cooling demand.

The steep downtrend will be reaffirmed if sellers take out the late April low at $2.251. The chart pattern also indicates that the short-term trend will turn up on a move through $2.448. This would come as a surprise to traders, given the current fundamentals, potentially fueling a strong short-covering rally. The catalyst for a turnaround could be a bullish surprise in today’s EIA report. However, it’s more likely to be the resumption of LNG activity.