Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show 143 Bcf Withdrawal

Natural gas futures are trading lower shortly after the regular session opening and ahead of the weekly government storage report. The report, due to be released at 15:30 GMT, is expected to show a draw in of about 143 Bcf for the week-ended February 14. Pressuring prices are mixed weather forecasts.

At 14:56 GMT, April natural gas is trading $1.941, down $0.030 or -1.52%.

Short-to-Mid-Term Weather Outlook

NatGasWeather noted a drop of around 15-20 heating degree days (HDD) from the Global Forecast System over the prior 36 hours, including 3-4 HDD shed overnight in its latest weather outlook.

“However, the European model has been running colder comparatively and has given back very little demand the past 36 hours,” NatGasWeather said. “These are important differences in need of watching since either the GFS will trend back colder or the European model will trend milder, either of which could lead to a market response.

“…What the natural gas markets could begin getting concerned about is much of the weather data favors cold retreating into Canada March 3-5 as a more seasonal pattern returns. Essentially, the back end of the 15-day forecast might need to be colder if newly found bullish weather sentiment is to continue.”

Natural Gas Intelligence (NGI) reported that analysts at EBW Analytics Group viewed the weather picture as largely unchanged outside of a slight delay to cooling expected between days six and 10 of the outlook period.

“Several factors have muted the market’s response to last weekend’s shift to a variable pattern,” the EBW analysts said. “Among others, predicted temperatures are not cold enough to seriously dent the storage surplus, the end of the withdrawal season is in sight and demand” for U.S. liquefied natural gas exports “remains in doubt.”

U.S. Energy Information Administration Weekly Storage Report

EBW said the major surveys indicate a withdrawal between 141 and 147 Bcf, a pull on the lighter side of that range could further weaken prices. Bloomberg analysts projected withdrawals as low as 138 Bcf and as high as 158 Bcf. The Wall Street Journal estimates a figure as low as 135 Bcf. Reuters is looking for a withdrawal as high as 166 Bcf. NGI’s model is calling for a 149 Bcf withdrawal.

Last year’s withdrawal was 163 Bcf and the five-year average draw is 136 Bcf, according to the EIA.

Daily Forecast

The first major upside target is the retracement zone at $1.992 to $2.040.

On the downside, the targets are layered at $1.909, $1.887 and $1.864.

The short-term direction is likely to be determined by whether investors build a support base between $1.909 and $1.864. So far this week, all we’ve seen is short-covering. This market needs to build a support base in order to give it a chance at a sustainable rally.