Natural Gas Price Fundamental Daily Forecast – EIA Data on Tap, but Focus Remains on Weather, LNG Demand

Natural gas futures are trading slightly better but inside yesterday’s range on Friday as traders awaited the latest government storage data and midday weather forecast. The choppy, two-sided trade this week also suggests that traders are looking for clarity before deciding on how to play for the next major move. Prices have been supported all week by improving liquefied natural gas volumes.

At 11:24 GMT, December natural gas futures are trading $2.994, up $0.018 or +0.60%.

US Energy Information Administration Weekly Storage Report

According to Natural Gas Intelligence (NGI), a Bloomberg survey found a median estimate of a 3 Billion Cubic Foot (Bcf) decrease in storage with estimates ranging from a withdrawal of 12 Bcf to an injection of 5 Bcf. The results of a Wall Street Journal poll ranged from a pull of 12 Bcf to an injection of 10 Bcf and landed at an average decrease of 2 Bcf.

A Reuters survey found estimates ranging from a withdrawal of 12 Bcf to an injection of 5 Bcf, with a median decrease of 3 Bcf.

NGI’s storage model, however, predicted a 5 Bcf increase. Energy Aspects issued a preliminary estimate of a 10 Bcf injection.

Last week, the EIA reported a withdrawal of 36 Bcf for the week-ended October 30. It was the first October pull in more than 10 years and reflected, in part, strengthening demand for U.S. liquefied natural gas (LNG) exports, yet prices still plunged.

Inventories remained relatively high, finishing October at 3,919 Bcf, 200 Bcf higher than a year earlier.

Short-Term Weather Outlook

According to NatGasWeather for November 13 to 19, “A cool front will approach the East today with heavy showers ahead of it. Behind the front over the Midwest and Ohio Valley, temperatures will be mild to cool with highs of 30s to 50s. The southern US will be pleasant with highs of 70s to lower 80s, while heavy rain and snow pushes into the Northwest. Cooler air will sweep across the Northeast Saturday with lows of 20s and 30s, with a second cold shot to follow Tuesday – Wednesday for modest bumps in national demand. Overall, swings in national demand every few days between moderate and low.”

LNG Feedgas Holding at Record Highs

NGI reported that feed gas volumes continued to improve in the first week of November and have held strong at around 10 Bcf much of the current week. But with the coronavirus pandemic surging anew in Europe – a vital export destination – demand could taper along with energy activity if more countries overseas impose new measures to slow down virus outbreaks, France, Germany and several other countries already have taken new actions.

Daily Forecast

We don’t expect much movement to be generated by the EIA storage report, but we could see some volatility if the weather forecast changes considerably at midday.

The December natural gas futures contract could strengthen on a sustained move over $3.014 with $3.109 to $3.176 the primary upside target. While a sustained move under $2.929 is likely to trigger an acceleration to the downside with $2.821 the next likely target.

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