Natural Gas Price Fundamental Daily Forecast – Advancing on Forecasts Calling for Increasing Heat

Natural gas futures are trading higher on Friday on back of yesterday’s low gas storage injection and forecasts calling for increasing heat. Additionally, the weather outlook helped drive up spot prices across every region of the Lower 48, according to Natural Gas Intelligence (NGI).

NGI also wrote, “Forecasts for increasing heat and a lower inventory build report offset enduring uncertainty about liquefied natural gas (LNG) demand, helping natural gas futures post gains Wednesday and ending a drubbing that cost the July contract nearly 20 cents over the prior three trading sessions.”

At 14:07 GMT, August natural gas futures are trading $1.756, up $0.028 or +1.62%.

Short-Term Weather Outlook

According to NatGasWeather for June 19-25, “A weather system stalled over the East with showers and comfortable highs of 60s to 80s will finally exit late this weekend with temperatures then warming into the 80s to lower 90s early next week. A cool front over the Plains is resulting in highs of 60s and 70s, while hot with 90s to 100s over the Southwest and Texas. Fresh weather systems will sweep across the Midwest this weekend with highs of only 60s and 70s, then into the east-central U.S. next week, while very warm to hot most elsewhere. Overall, strong demand in the southern U.S. but light in the Midwest and east-central U.S.

U.S. Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 85 billion cubic feet for the week-ended June 12. That was a little higher than the average increase of 79 billion forecast by analysts polled by S&P Global Platts.

The latest build marked a decline from the 93 Bcf injection a week earlier. It compared with a build of 111 bcf during the same week a year earlier and a five-year average build for the week of 87 Bcf.

Natural Gas Intelligence (NGI) reported that ahead of the report, a Bloomberg poll found injection estimates ranging from 78 Bcf to 87 Bcf, with a median of 84 Bcf. A Wall Street Journal survey produced an average of 85 Bcf, in line with results of a Reuters survey. NGI estimated an 86 Bcf build.

Total stocks now stand at 2.892 trillion cubic feet, up 722 billion cubic feet from a year ago, and 419 billion cubic feet above the five-year average, the government said.

Daily Forecast

The latest figures from the EIA suggest that supply and demand are gradually pulling toward a balance point, analysts said, as businesses reopen amid the coronavirus pandemic and economic activity starts to gather momentum, driving energy demand.

The price action suggests the market may be closer to a short-term bottom than previously anticipated. Remember the first up move is likely to be fueled by short-covering. If there is a second rally after a retest of the lows then this will likely be fueled by aggressive counter-trend buyers.

For a look at all of today’s economic events, check out our economic calendar.