Natural Gas Price Fundamental Daily Forecast – Traders Looking for EIA Report to Show Relatively Steep Draw

Natural gas futures are edging lower shortly after the regular session opening on Thursday as investors await the release of the latest government weekly storage report at 15:30 GMT and the midday weather forecasts that could determine the tone of the market the next few days.

Keep in mind that the storage reports represent past demand and the weather forecasts represent potential future demand. So since we are trading “futures”, any major shift in the forecasts are likely to override the data in the report.

At 13:40 GMT, February natural gas is trading $2.694, down $0.022 or -0.81%.

US Energy Information Administration Weekly Storage Report

Looking ahead to today’s EIA storage report for the week-ended January 1, traders have priced in a relatively steep withdrawal due to the cold weather that swept across the country last week, driving heating demand higher.

According to Natural Gas Intelligence (NGI), “A Bloomberg survey found estimates ranging from a pull of 124 Bcf to a decrease of 146 Bcf, with a median forecast for a 138 Bcf decline in stockpiles. A Reuters poll found withdrawal estimates spanning from 118 Bcf to 158 Bcf and a median estimate of a 135 Bcf decline.”

“A Wall Street Journal poll, meanwhile, landed at an average pull of 137 Bcf, though estimates ranged from a decrease of 119 Bcf to a decline of 158 Bcf. NGI modeled a 135 Bcf withdrawal.”

Last year, the EIA recorded a 44 Bcf decrease for the comparable year-ago period.

Last week, the EIA reported a 114 Bcf withdrawal for the week-ending December 25. Analysts on average had anticipated a pull in the mid-120s Bcf. Total working gas in storage fell to 3,460 Bcf, which was 251 Bcf above year-ago levels and 206 Bcf above the five-year average.

Short-Term Weather Outlook

According to NatGasWeather for January 6-12, “Weather systems with rain & snow will impact the Northern Rockies, while a second milder system tracks across Eastern Texas and the South. Overall, demand will be light today into Friday with much of the U.S. near to warmer than normal with highs of 40s to 70s.

Demand will increase this weekend into the start of next week as cooler air with lows of -0s to 30s spreads across much of the U.S. However, demand will again become light mid-next week as much of the U.S. warms back above besides the South and Southeast where weather systems with showers and slightly cool conditions will track.”

Daily Forecast

The upside bias is expected to remain intact as long as $2.579 holds as support. The bias will become neutral if prices hold between $2.519 and $2.579. A bearish bias will be created if $2.519 fails as support.

Our first upside target was $2.775. Yesterday, the market hit a high of $2.770. Taking out $2.775 will change the daily trend to up with $2.858 to $2.998 the next potential upside target.

On the downside, a failure to hold $2.519 could trigger a break into $2.517 to $2.457. Aggressive counter-trend buyers could come in on a test of this area.