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

Natural gas futures are edging higher shortly before the regular session opening and the weekly government storage report at 14:30 GMT. After a steep sell-off at the start of the week, the market has been rangebound with projected cold weather forecasts propping up the market just enough to prevent a washout, but not enough to fuel a breakout to the upside.

At 10:15 GMT, December natural gas is trading $2.447, up $0.020 or +0.82%.

With the cold weather coming, most of the action has been in the cash market and front month November futures contract. The nearby contract has been supported by weather models that are projecting cold over the next couple of weeks. Meanwhile, the December contract is being weighed down by forecasts calling for milder temperatures after the first week of November.

Natural Gas Intelligence said, “Cash prices were mostly stronger Wednesday as the second in a series of cold blasts was set to drop into the country’s midsection, sending temperatures into the South plunging. The NGI Spot Gas National Average rose 4.5 cents to $2.055.

Short-Term Weather Outlook

According to NatGasWeather for October 23 to October 29, “As one weather system exits the East, a new weather system and associated cold shot will dive down the Rockies & Plains today, then deep into Texas and the South Thursday with heavy showers. Lows behind these two systems will be in the 20s and 30s, coldest over Rockies and North Plains.”

“The rest of the southern US will be mostly comfortable with highs of 60s to 80s for light demand. A break between weather systems will occur over the southern and eastern US Sunday through Monday as highs warm into the 60s and 70s. At the same time, the coldest system in the coming series will arrive into the Rockies & Plains with lows of 10s to 30s for strong demand. Overall, national demand will be moderate to high, then high to very high mid-next week.”

U.S. Energy Information Administration Weekly Storage Report

Traders are expecting another larger-than-normal storage injection. Bloomberg estimates a range of 81 Bcf injection to 93 Bcf injection. Reuters is looking for the same range and a median injection of 88 Bcf. NGI is projecting a 93 Bcf build.

Last year, the EIA recorded a 62 Bcf injection for the similar week, and the five-year average build is 73 Bcf. Inventories as of October 11 stood at 3,519 Bcf, 494 Bcf above year-ago levels and 14 Bcf above the five-year average, according to EIA.

Daily Forecast

The short-term range is $2.568 to $2.388. Its 50% level or pivot is $2.478. This price level is controlling the direction of the December natural gas futures contract this week. Trader reaction to this level will determine the direction of the market today.

Look for an upside bias to develop on a sustained move over $2.478 with potential upside targets coming in at $2.564 to $2.568. On the downside, the nearest target is $2.388.

Although cold weather is in the forecast, traders are concerned because there is ample supply and the cold weather is not expected to linger very long.