Natural Gas Price Fundamental Daily Forecast – EIA Injection Over 40 Bearish, Under 30 Bullish

Natural gas futures are edging higher on Thursday, putting the market in a position to breakout to the upside following a dramatic technical reversal bottom the previous session. Underpinning prices is the news that the Freeport LNG plant remains on track to return to service in early October. The catalyst for a possible surge in prices, however, could be today’s weekly government storage report or a bullish midday weather forecast.

At 11:28 GMT, September natural gas futures are trading $8.335, up $0.069 or +0.83%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $28.53, up $2.12 or +8.03%.

LNG Regulator to Allow Freeport to Resume Partial Operations in October

After trading under pressure most of the session on Wednesday, September natural gas futures mounted a strong recovery into the close after the second-largest U.S. liquefied natural gas (LNG) exporter on Wednesday said it reached an agreement with a federal regulator that will allow it to resume some operations at its Quintana, Texas, plant in October, according to Reuters.

Freeport LNG shut the plant, which supplies about 20% of the U.S. LNG exports, following an explosion and fire on June 8. Its closure helped to push up LNG prices in Europe and Asia, and dampening U.S. natural gas prices.

This is potentially bullish news because it means more gas will be used for LNG protection with less going into storage. The United States became the world’s top LNG exporter during the first half of 2022. But not matter how high global gas prices rise, the United States cannot export any more LNG because its plants were already operating at full capacity.

Energy Information Administration Weekly Storage Report

Freeport is just part of the news today. Another part is the weekly government storage report. This report from the EIA, due to be released at 14:30 GMT, could offer some insight that launches the next spike to the upside, or plunge into a value zone.

According to Bespoke Weather Services, weather-adjust power burns were looser last week compared with the current week. Based on this assessment, they are calling for a storage injection of 35 Bcf.

That would compare with a 16 BCF injection into inventories for the comparable week last year, according to EIA. The five-year average build is 33 Bcf.

Natural Gas Intelligence (NGI) wrote, “A Bloomberg survey of eight analysts produced a range of injection estimates from 19 Bcf to 35 Bcf, with a median of 26 Bcf. A Wall Street Journal poll of 12 analysts had a tighter range of projections that averaged a 29 Bcf increase in storage. Reuters polled 15 analysts, whose estimates were as high as 37 Bcf, with a median forecast of 29 Bcf.”

Daily Forecast

An injection over 40 Bcf will likely be bearish for prices. This could drive the market into the first support zone at $7.372 to $6.888, followed by the long-term support zone at $6.557 to $5.839.

An injection under 30 will likely trigger a spike through minor resistance at $8.705. If this creates enough upside momentum then look for a possible surge into $9.419 to $9.598 over the short-run.

If the report fails to move the needle then traders will shift their focus on the weather reports that are coming in a little cooler for mid-month than previously expected. This is a potentially bearish development.