Natural Gas Price Fundamental Daily Forecast – EIA Number Should Be Slightly Below 5-Year Average

Natural gas futures are trading higher on Thursday shortly before the release of the government’s weekly storage report. After a relatively flat performance on Wednesday, prices moved higher, boosted by new overnight forecasts calling for hotter temperatures.

At 13:32 GMT, August natural gas is trading $1.869, up $0.045 or +2.47%.

Short-Term Weather Outlook

According to NatGasWeather for July 9 to July 15, “Upper high pressure continues to stretch from Texas to the Great Lakes and across the Mid-Atlantic states and coast with very warm to hot highs of upper 80s to mid-90s. It’s also hot over much of the West with highs of 90s and 100s besides the cooler Northwest. Heavy showers continue over the Southeast as a weather system exits, although still warm & humid with highs of mid-80s to lower 90s. A fresh weather system will push into the Great Lakes and Ohio Valley this weekend with comfortable highs of 70s to 80s, although countered by very hot conditions over Texas, the Southwest, and Southern Plains with 100s. Overall, national demand will be high.”

Energy Information Administration Weekly Storage Report

The EIA is set to release its weekly storage report for the week-ending July 3 at 14:30 GMT.

NatGasWeather says, “For today’s EIA weekly storage report, survey averages favor a build of +56-58 Bcf, slightly smaller than the 5-year average of +68 Bcf. It was hotter than normal over much of the eastern 2/3 of the U.S., while cooler than normal over most of the West. We expect +53 Bcf, a touch to the bullish side.”

Bloomberg analysts are looking for an injection ranging from 55 Bcf to 62 Bcf, with a median of 59 Bcf. A Reuters poll predicts a range of 51 Bcf to 65 Bcf with an average of 58 Bcf and the Wall Street Journal forecasts a range of 51 Bcf to 63 Bcf with a median of 57.

Daily Forecast

The early price action suggests an upside bias today. The weather models maintain a “solidly hot U.S. pattern” over the next 15 days, particularly for the period starting next Thursday and extending through July 23, NatGasWeather said. “The European model continues to run hotter than the GFS by more than 10 CDD, but both show widespread highs of 90s and 100s and humid conditions that will push the heat index into the dangerous 100-120 range. We continue to expect this hot U.S. pattern will last through the end of July.”

The main trend is up according to the daily swing chart.

Look for an upside bias on a sustained mover over $1.848 with targets coming in at 1.924, 1.960 and $1.982.

A sustained move under 1.848 will be a sign of weakness, but the trigger point for an acceleration to the downside is $1.785. This could lead to a test of $1.721 to $1.672.

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