Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show 25 Bcf Storage Draw

Natural gas futures are trading lower on Wednesday, shortly after the regular session opening and the release of the weekly government storage report. The report is being released a day earlier due to Thursday’s U.S. government holiday.

Prices are being pressured this week due to concerns over demand after weather forecasts showed warmer trends over the near-term.

At 14:31 GMT, January natural gas futures are trading $2.516, down 0.017 or -0.67%.

U.S. Energy Information Administration Weekly Storage Report

At 16:00 GMT, the EIA is scheduled to release its weekly storage report for the week-ending November 22. The report is expected to show a considerably smaller withdrawal compared to last week’s 94 Bcf pull.

Bloomberg analysts are looking for a withdrawal of 27 Bcf, with an expected withdrawal range of 19 Bcf to 35 Bcf. Reuters analysts are predicting a consensus of 28 Bcf, with a range of minus 16 Bcf to minus 42 Bcf.

The ICE EIA Financial Weekly Index settled Tuesday at minus 27 Bcf. Natural Gas Intelligence (NGI) is predicting a withdrawal of 29 Bcf.

Last year, the EIA recorded a 70 Bcf pull for the period. The 5-year Average calls for a minus 57 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for November 27 to December 3, “One weather system will track across the Great Lakes and Ohio Valley today with rain and snow, while a second more potent storm slams into the West Coast. The western U.S. storm will track into the central and eastern U.S. this weekend and early next week with heavy rain and snow, along with cold conditions with widespread lows of 0s to 30s for strong national demand. High pressure will return across the western, central, and southern US mid-next week with highs warming into the 50s to 70s for much lighter demand. Overall, demand will be moderate today, then increasing to high through early next week.”

Daily Forecast

If the selling pressure continues through $2.500, then we could see an extension into the September bottom at $2.484.

Be prepared for heightened volatility and whip-saw action. The size of the speculative short position also makes the futures contract vulnerable to a short-covering rally later in the session, especially if the expected drop in storage comes in larger-than-expected.