Natural Gas Price Fundamental Daily Forecast – Will Rising Production Show Up in Today’s EIA Storage Report?

Natural gas futures are edging higher early Thursday shortly before the regular session opening and the release of this week’s government storage report. The early price action is likely being driven by position-squaring ahead of the report and some light profit-taking.

The market hasn’t posted a higher close since September 16, just one day before its last main top at $2.745. It finished at its lowest level since August 27 on Wednesday. The daily chart indicates there is even more room to the downside with main bottoms at $2.185 and $2.135 the only visible potential support levels.

At 10:00 GMT, November natural gas is trading $2.272, up $0.025 or +1.11%.

The acceleration in the sell-off this week has been driven by relatively tame long-term weather patterns and a potential triple-digit storage injection in today’s U.S. Energy Information Administration (EIA) weekly storage report at 14:30 GMT.

Cash prices remained mixed with cold temperatures in the West lifting prices, and mild temperatures in the Northeast weighing on demand.

Bespoke Weather Services models aren’t showing anything unusual with high demand the rest of this week likely to be offset by lower-than-expected demand next week. “Models generally remain in decent agreement, and even the minor deviations keep total demand easily below normal levels.”

U.S. Energy Information Administration Weekly Storage Report

Traders are looking for today’s EIA report to show a 106 Bcf build.

Bloomberg analysts are looking for an injection of 100 Bcf to 108 Bcf, with a median of 106 Bcf. The Wall Street Journal is reporting a range of 95 Bcf to 105 Bcf, with a median of 106 Bcf. Natural Gas Intelligence (NGI) predicts a 109 Bcf injection and Intercontinental Exchange Futures settled Tuesday at 110 Bcf build.

Last year, the EIA reported a 91 Bcf injection, and the five-year average stands at 83 Bcf.

Short-Term Weather Outlook

According to NatGasWeather for October 3 to October 9, “Strong high pressure will dominate the South & East for a couple more days with highs of 80s to lower 90s, hottest from Texas to the Mid-Atlantic Coast for strong late season demand. Chilly conditions continue across the far northern US with lows dropping into the 20s to 40s for modest early season heating demand. Fresh cooling will spread across the Midwest and Northeast early next week with lows of 30s and 40s. Across the southern US, high pressure will ease next week with more comfortable highs of 70s and 80s as 90s disappear. Overall, stronger national demand this week versus last week due to a better mix of heating and cooling needs but then dropping to moderate-low late this weekend through next week.”

Daily Forecast

Last week’s huge storage build came as a surprise so traders will be eager to see if today’s number confirms the expected big jump in production.

A bigger than expected figure could spike prices to the downside, making the bottoms at $2.185 and $2.135 likely near-term targets.

A lower than expected number should trigger a short-covering rally with the first objective coming in at $2.368, followed by $2.440.