Natural Gas Price Fundamental Daily Forecast – Low EIA Build Will Indicate Supply/Demand is Tightening

Natural gas futures are trading flat early Thursday following another steep sell-off the previous session and well-ahead of today’s weekly government storage report, due to be released at 14:30 GMT.

On Wednesday, the futures contract posted a two-sided trade before turning lower for the session. Capping gains and weighing on prices were on-going recovery attempts following the destruction left in the wake of Hurricane Laura and still weak U.S. liquefied natural gas (LNG) exports.

At 03:07 GMT, October natural gas futures are trading $2.488, up $0.002 or +0.08%.

The price action also suggests that estimates for a modest storage build may be easing concerns about fall containment challenges. Nonetheless, the news wasn’t strong enough to attract enough speculative buyers to finish higher.

U.S. Energy Information Administration Weekly Storage Report

The market is anticipating a relatively modest addition to underground gas stockpiles for the week-ending August 29. The consensus estimate is calling for a build of about 37 Bcf.

According to Natural Gas Intelligence (NGI), a Bloomberg survey found injection estimates ranging from 29 Bcf to 43 Bcf, with a median of 37 Bcf, while at Reuters poll found estimates ranging from 25 Bcf to 43 Bcf and a median of 35 Bcf.

NGI estimates an injection of 32 Bcf, on par with Bespoke Weather Services prediction.

Short-Term Weather Outlook

According to NatGasWeather for September 2 to September 8, “Comfortable conditions continue over the Midwest, Ohio Valley, and Northeast with highs of 60s to low 80s. Hot high pressure rules the West with highs of upper 80s to 100s. The East will warm into mid-80s to low 90s as high pressure builds in for a modest bump in national demand. However, strong cool shots will arrive into the central US next week with highs of only upper 50s to 70s, including mid to low 80s into Texas and the South.”

Short-Term Outlook

Cooling temperatures from the effect of Hurricane Laura is keeping demand and futures in check. But the main focus for traders will be the EIA storage report. A number in the low 30’s will mark a second week that was lower than the week before and this will indicate that supply and demand is tightening.

LNG exports remain a major concern with some forecasting that key production facilities may not see full restoration for another two to three weeks.

EBW Analytics Group had a similar read. “The main issue at this point is the time frame for restoring power at Sabine Pass and Cameron,” analysts said Wednesday.

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