Natural Gas Price Fundamental Daily Forecast – Traders Looking for EIA Report to Show Lower-than-Average Build

December Natural gas futures are trading nearly flat shortly before the regular session opening on Thursday and the release of the government’s weekly storage report at 14:30 GMT. The market is trading higher for the week which highlights the resiliency of this market as bullish investors continue to bet on increased liquefied natural gas demand and perhaps greater heating demand this winter. The price action also suggests diminished worries about storage containment.

At 09:06 GMT, December natural gas futures are at $3.246, up $0.017 or +0.53%.

On Wednesday, even the nearby October futures contract rebounded with a vengeance after plunging earlier in the week. Helping to fuel the recovery were signs of a liquefied natural gas (LNG) recovery, forecasts of greater weather-driven demand and new storage estimates that indicated containment worries may have been overblown, according to Natural Gas Intelligence (NGI).

Short-Term Weather Outlook

On Wednesday NatGasWeather wrote, “The weather data has added demand the past few days in both the GFS and European models for September 29-October 3 as a strong early season cool shot sweeps across the Great Lakes and Northeast with highs of 40s to 60s and lows of 30s and 40s. At the same time, heat will build over California and the Southwest with 90s and 100s.

This September 29 – October 3 has added enough demand the past few days to take on a bullish tilt, although still not hot or cold enough before and after. Although, the after is subject to cooler trends in time. Another day with wild price swings in the natural gas markets, with each day seemingly having a different reason for why prices are trading as volatile as they have.”

US Energy Information Administration Weekly Storage Report

This week’s EIA report covering the week-ending September 18 is expected to come in lighter than last week. There is a lot of interest in this report because traders want to know if last week’s larger-than-normal print was a one-off anomaly or reflective of a looser market.

According to Natural Gas Intelligence (NGI), “A Bloomberg survey found estimates ranging from 68 Bcf to 82 Bcf, with a median of 77 Bcf, while estimates in a Wall Street Journal poll ranged from 71 Bcf to 85 Bcf, with an average of 77 Bcf. A Reuters poll of 13 analysts showed estimates ranging from 68 Bcf to 96 Bcf, with a median of 76 Bcf. NGI projected an injection of 71 Bcf.”

Last year, EIA recorded a 97 Bcf build for the period, and the five-year average is an injection of 80 Bcf.

Daily Forecast

Continue to monitor the price spreads. Currently, they are indicating the bullishness is being best expressed in the winter contracts (December through March). This bullish traders are betting on a normal winter, steady heating demand domestically and a resumption in consistent U.S. LNG export needs in Asia and Europe.

If today’s EIA report comes in over the median then look for a sharp break in the front end of the curve (October and November).

Looking forward, the wild card remains the containment of the COVID-19 pandemic.