Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show 87 Bcf Withdrawal

Natural gas futures are trading lower on Thursday shortly before the regular session opening at 13:00 GMT and the release of the U.S. Energy Information Administration (EIA) weekly storage report at 15:30 GMT. Continuing to weigh on prices are long-range weather forecasts calling for lower demand. Weaker spot prices across most of the United States are also pressuring prices.

At 12:36 GMT, February natural gas is trading $2.231, down $0.033 or -1.46%.

Long-Term Outlook Bearish

Natural Gas Intelligence is reporting, progressively warmer long-range outlooks early Wednesday essentially put this month on track with the very warm December last year, according to Bespoke Weather Services. Specifically, weather models reflected warmer changes from the Plains to the East next week, something Bespoke saw as a risk given how strong the upper level ridge is projected to be in the eastern half of the nation during that time.

“Up to that point, agreement in the forecast models is good,” Bespoke chief meteorologist Brian Lovern said.

“That agreement deteriorates afterwards” as the Global Ensemble Forecast System, as usual the colder model, showed a much more favorable setup to get cold air back into the United States, while the European model suggested the eastern half of the nation would start the new year warmer. While Bespoke sees risks of “some cold” in January, it continues to lean toward the European model to start the month.

NatGasWeather added, “The GFS data is still exceptionally bearish” beginning Saturday December 21 to December 29, “with much above-normal temperatures over most of the United States, the forecaster said.

U.S. Energy Information Administration Weekly Storage Report

Traders are looking for the report to show a pull of about 87 Bcf. Reuters is predicting withdrawals of 68 Bcf to 102 Bcf, with a median draw of 92 Bcf. Natural Gas Intelligence is expecting to see a draw of 86 Bcf.

Daily Forecast

The chart pattern suggests the direction of the February natural gas market on Thursday will be determined by trader reaction to a short-term retracement zone at $2.260 to $2.239.

Look for a short-covering rally to develop on a sustained move over $2.260 with $2.351 a potential near-term target if the EIA report is bullish or the weather forecasts change.

A sustained move under $2.239 will indicate the selling is getting stronger. This could trigger a retest of the recent main bottom at $2.169. A bearish miss in the EIA report could send prices sharply lower.