Natural Gas Price Fundamental Daily Forecast – Bearish EIA Miss Could Trigger Another Steep Plunge

Natural gas futures are trading sharply lower on Thursday after hitting a multi-year low earlier in the session. Demand destruction from the coronavirus pandemic and worries about today’s government storage report are weighing on prices.

Today’s report, due to be released at 14:30 GMT, is expected to give traders their first real look at the damage caused by the COVID-19 outbreak.

At 13:33 GMT, May natural gas futures are trading $1.556, down $0.031 or -1.95%.

“This morning’s weekly storage report is likely to significantly influence today’s trading, since it will provide the first solid indication of the impact of the virus on demand for gas,” EBW Analytics Group analysts said early Thursday. A smaller draw versus estimates “could send prices down sharply.”

U.S. Energy Information Administration Weekly Storage Report

Estimates ahead of the EIA report have ranged widely from a withdrawal as small as 16 Bcf to as large as 31 Bcf. Bloomberg analysts are looking for a 31 Bcf draw. A Wall Street Journal survey calls for a 26 Bcf pull and the Natural Gas Intelligence (NGI) model estimates a 10 Bcf draw.

Last year, the EIA recorded a 6 Bcf injection for the similar week, while the five-year average stands at a withdrawal of 19 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for April 2-8, “Warm conditions will continue across the southern US with highs of 70s and 80s. A cold shot with rain and snow will track into the Rockies and Plains today with highs of 20s to 40s, while mild elsewhere with highs of 40s to 60s. Warm versus normal conditions will build into the Midwest and East late this weekend through mid-next week with highs of 60s from Chicago to NYC for very light demand, while cool air shifts over the Northwest & Rockies w/highs of 30s to 50s. Overall, modest national demand through Friday-Saturday, then very light Sunday through Wednesday.

Daily Forecast

A report miss could trigger a mild short-covering rally, but there is nothing in the works that could fuel a long-term turnaround. Higher oil prices could actually underpin prices after the release of the report.