Natural Gas Price Fundamental Daily Forecast – Down as Traders Brace for Rare Injection of About 24 Bcf

Natural gas futures are trading lower on Thursday shortly before the release of the government’s weekly storage report. Today’s early selling took out the June and July bottoms, bringing the market closer to a freefall situation. Mild temperatures continue to weigh on prices with forecaster NatGasWeather predicting a continuation of the bearish pattern.

At 12:30 GMT, January natural gas futures are trading $2.746, down $0.092 or -3.24%.

“Bigger picture, the coming pattern still is to the bearish side due to national HDDs being below normal most of the of the next 15 days and the December 1-2 period still showing a mild overall U.S. set-up,” NatGasWeather said.

Short-Term Weather Outlook

According to NatGasWeather for November 19-25, “After being chilly in recent days, the Great Lakes and Northeast will warm into the 40s to 60s. The southern U.S. remains nice with highs of 60s to 80s, while the West will be unsettled as weather systems bring rain, snow, and highs of 30s to 50s. Much of the U.S. will warm above normal this weekend but then with the Midwest cooling off into the 30s and 40s early next week as a weather system tracks through. Overall, national demand will be low.

U.S. Energy Information Administration Weekly Storage Report

The EIA is scheduled to release its weekly storage report at 15:30 GMT on Thursday. Last year, the government report showed a 66 Bcf withdrawal for the period.

According to Natural Gas Intelligence (NGI), “A Bloomberg survey found estimates ranging from a withdrawal of 9 Bcf to an injection of 26 Bcf, with a median of a 22 Bcf increase. A Reuters poll found estimates spanning from a pull of 22 Bcf to an increase to an increase of 27 Bcf and a median of a 19 Bcf injection. A Wall Street Journal poll, meanwhile, landed at an average injection of 10 Bcf, though estimates ranged from a decrease of 25 Bcf to an increase of 22 Bcf.”

“Though there is a gulf between low and high estimates, the midpoint of each survey calls for a modest increase, which would mark a departure from seasonal norms. The five-year average is a pull of 24 Bcf.”

“Energy Aspects issued a preliminary estimate for a 19 Bcf build. The firm pointed to warm weather during the week and estimated a 40% deficit in heating degree days for the week versus the 10-year average.”

“NGI is modeling a 23 Bcf injection for the report.”

Daily Forecast

Although analysts anticipate withdrawals to resume with next week’s EIA report, concerns about hefty storage levels linger.

We’re likely to continue to see downside pressure or at best sideways price action until production starts to fall, economic activity increases and stronger energy demand returns.

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