Natural Gas Price Fundamental Daily Forecast – Traders Focusing on EIA Report, LNG Export Demand

Natural gas futures are trading slightly lower on Thursday, but still hovering around the multi-month high reached earlier in the week. After Tuesday late session surge, the market is posting a pair of inside days as traders await today’s weekly government storage report and potentially more clues on the supply/demand balance.

At 13:08 GMT, October natural gas is trading $2.552, down $0.011 or -0.43%.

The near-term weather outlook is mixed, which could be putting a lid on prices while the market is likely being underpinned by a friendlier outlook for LNG demand.

Short-Term Weather Outlook

According to NatGasWeather for August 20-26, “Hot conditions continue across the western and southern U.S. with highs of 90s and 110s, hottest in California and Southwest deserts. The Midwest, Mid-Atlantic, Central Plains, and Northeast remain comfortable due to weak cool fronts with highs of 70s and 80s. Warmer temperatures will spread up the East Coast Sunday through Tuesday for a swing to stronger national demand. However, fresh cool shots will arrive into the northern U.S. mid-next week. Overall, strong demand in the western half of the country and moderate for the eastern half.”

US Energy Information Administration Weekly Storage Report

Today’s EIA report, due to be released at 14:30 GMT, is expected to show a build of about 43 Bcf.

Natural Gas Intelligence (NGI) is reporting that a Bloomberg survey of eight analysts showed injection estimates ranging from 36 Bcf to 48 Bcf, with a median build of 43 Bcf. A Reuters poll had a wider range from 33-53 Bcf with the same median build expectation of 43 Bcf.

NGI’s storage model predicted a 46 Bcf injection for this week’s report, which covers the week ending August 14.

According to NatGasWeather, “For today’s EIA storage report, national surveys are clustered at +43 Bcf, near exact to the 5-year average of +44 Bcf. It was warmer than normal over most of the U.S. besides the cooler Northwest. Our algorithm predicts a build of +41-42 Bcf, but difficult to account for how much fuel switching occurred after a more than 50 cent spike.”

Daily Forecast

Traders are going to have one eye on the EIA report and another eye on liquefied natural gas (LNG) feed gas demand or shifts in European prices that could influence the domestic market.

The U.S. market is usually perceived as the leader, but lately traders have been getting some of their cues from the European markets.

Thursday marks the deadline for cancellations from Cheniere Energy Inc. export facilities for October, which could mean “whisper numbers emerging around export demand,” according to analysts at Tudor, Pickering, Holt & Co. (TPH).