Natural Gas Price Fundamental Daily Forecast – EIA Expected to Report Higher-Than-Average 120 Bcf Draw

Natural gas prices are trading nearly flat shortly before the regular session opening after giving back earlier gains. A mixed weather outlook continues to drive a two-sided trade, but the price action suggests traders are leaning to the upside. Today’s early price action also reflects position-squaring ahead of the release of the U.S. government’s weekly storage report at 15:30 GMT.

At 12:41 GMT, January natural gas futures are trading $2.677, unchanged. The overnight high is $2.724.

U.S. Energy Information Administration Weekly Storage Report

A consensus of analysts is calling for a 120 billion draw during the week-ending December 11 in this week’s EIA storage report. This is potentially larger-than-normal.

Natural Gas intelligence (NGI) is reporting that a Bloomberg survey of analysts produced a withdrawal range from 105 Bcf to 138 Bcf, with a median of 119 Bcf. A Wall Street Journal poll had the same results, while a Reuters poll produced a median draw of 120 bcf. NGI projected a 133 Bcf draw.

The estimates compare with the 97 Bcf decrease the EIA recorded in the similar week last year, while the five-year average decline for that week stands at 105 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for December 16-22, “A winter storm with heavy rain and snow will track up the East Coast today and Wednesday with chilly lows of 10s to 30s. It’s also cool across the central and northern U.S. to aid strong national demand. A second system will bring rain and snow to the Northwest. A mild break with widespread highs of 40s to 70s is expected over most of the U.S. this weekend into next week for light demand besides the unsettled Northwest & Northeast corners. Overall, national demand will be moderate-high through Friday, then back to low.”

Daily Forecast

According to the analysts at EBW Analytics Group, last week’s tight EIA figure may be indicative of structurally higher demand per gas-heating degree day stemming from the pandemic, according to analysts.

“If Thursday’s report is similarly bullish, it could help confirm structurally higher demand and bolster winter contacts. If bearish – which we slightly favor – a resumption of bearish momentum may be the more likely result.”

The daily chart indicates potential resistance at $2.685 to $2.760. If traders respect this zone and start selling, prices could tumble back to $2.546.

However, a sustained move over $2.760 will indicate the presence of strong buyers and this could turn the current resistance zone into support.

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