Natural Gas Price Fundamental Daily Forecast – EIA Expected to Report 63 Bcf Weekly Injection

Natural gas futures are trading nearly flat early Thursday shortly before the release of the government’s weekly storage report, following two days of steep selling pressure. After surging to a multi-month high on Monday, prices have retreated due to weather-driven demand uncertainty, a flattening of U.S. exports and inconclusive government storage estimates.

At 11:30 GMT, July natural gas futures are trading $3.036, up $0.008 or +0.26%.

Short-Term Weather Outlook

According to NatGasWeather for May 20-26, “A weather system has stalled over Texas and the South with showers, thunderstorms, and comfortable highs of 60s to 80s. A cooler system is tracking through the Mountain West with showers and highs of 50s and 60s. But with most of the U.S. experiencing pleasant temperatures with highs of 60s to 80s through Saturday, national demand will be light.

National demand will increase late this weekend through early next week as very warm highs of 80s to 90s sets up over the East, hottest Southeast, although countered by nice conditions elsewhere. Overall, low-very low national demand through Saturday, then moderate Sunday-Tuesday.”

LNG Demand Off Recent Highs

Natural Gas Intelligence (NGI) reported that amid ongoing maintenance work at export facilities, liquefied natural gas (LNG) levels hovered notably off recent highs. Feed gas volumes were just shy of 10.4 Bcf on Wednesday, according to NGI data, well below the 11 Bcf/d or higher that was common in April and into early May.

Energy Information Administration Weekly Storage Report

Projections call for a relatively light increase in storage because of cool weather that lingered across the Midwest and East last week. That drove heating demand in those regions, along with strong LNG demand in the South Central region, according to NGI.

While NGI’s model called for a 63 Bcf injection, Bloomberg’s estimates showed a median of 59 Bcf. Predictions ranged from 54 Bcf to 66 Bcf. Reuters guesses ranged from injections of 54 Bcf to 71 Bcf, with a median build of 59 Bcf and a Wall Street Journal survey landed at an average build of 61 Bcf, with estimates ranging from increases of 54 Bcf to 69 Bcf.

Daily Outlook

This week’s estimates compare with an 84 Bcf increase in storage a year earlier and a five-year average injection of 86 Bcf.

With forecasts calling for end of the month heat dampened by new estimates, LNG exports below recent highs and larger injections expected in the coming weeks, bullish traders may struggle at current price levels.

We could see a short-term pullback, but not necessarily a change in trend. Buyers will resurface once they see value.