Natural Gas Prices Forecast: EIA Report to Dictate NatGas Futures Today

Highlights

• U.S. natural gas futures fluctuate ahead of a pivotal EIA storage report.
• Analysts forecast an 85 Bcf build, fueling anticipation after last week’s rally.
• Current mild weather forecasts dampen demand, weighing on prices. 
• EIA’s STEO projects record highs in both natural gas production and consumption for 2023.

U.S. Natural Gas Futures in Flux as EIA Report Looms

Natural gas futures in the U.S. are wobbling as traders await the weekly storage report from the Energy Information Administration (EIA). After last week’s report defied expectations, sparking a four-day rally, analysts are projecting an 85 Bcf build for the week ending October 6. The current working natural gas stocks stand at 3,445 Bcf, a 5% increase over the five-year average and a 12% jump from last year.

Dampening Sentiment and Demand Outlook

Prices dipped nearly 3% on Wednesday, following forecasts of milder weather, diminishing demand expectations for the next fortnight. This downturn follows a sequence of highs, where the futures contract closed at its highest levels since late January for three consecutive days.

EIA’s Short-Term Energy Outlook (STEO)

According to the EIA’s latest Short-Term Energy Outlook, both production and domestic consumption of natural gas are set to hit record highs in 2023. Dry gas production is expected to rise to 103.72 billion cubic feet per day (bcfd) in 2023, up from 99.60 bcfd in 2022. Domestic gas consumption, however, is anticipated to climb only marginally from 88.46 bcfd in 2022 to 89.17 bcfd in 2023.

LNG Exports and Coal Displacement

The STEO also forecasts that U.S. liquefied natural gas (LNG) exports will scale new heights, touching 11.62 bcfd in 2023. This uptrend in natural gas availability is likely to further reduce coal consumption, contributing to a projected decrease in carbon dioxide emissions.

Short-Term Forecast: Cautiously Bearish

Given the imminent EIA report and the recent cooling of demand forecasts, short-term market sentiment leans bearish. Traders appear vigilant, recalibrating their positions in anticipation of shifts in supply and demand dynamics.

Technical Analysis

Natural gas futures are trading at 3.317, which is closer to the minor resistance at 3.406 than to the main support at 3.002.

The price being above both the 50-day moving average of 2.773 and the 200-day moving average of 2.652 suggests a bullish bias in the short and medium-term.

However, the slight decrease from the previous daily price of 3.377 could signal a momentary retraction, making the short-term outlook less certain.

Overall, the market sentiment appears to lean bullish, but the proximity to minor resistance and the slight drop in daily price calls for cautious optimism.