Natural Gas Prices Forecast: Futures Edge Up Ahead of Key EIA Report

Highlights

• U.S. natural gas futures show modest rise pre-EIA report
• EIA expected to report lower-than-average natural gas draw
• Bearish short-term outlook for U.S. natural gas futures

Consolidation Before EIA Report

U.S. natural gas futures are marginally increasing as the market focuses on the upcoming Energy Information Administration’s (EIA) weekly storage report. Despite ample storage and mild temperatures posing challenges, the market remains steady, supported by strong LNG demand and technical buying.

EIA Storage Report: Key Figures Expected

The EIA report, covering the week-ending December 15, is crucial for market direction. Analysts anticipate a draw of approximately -76 to -77 Bcf, significantly lower than the 5-year average draw of -107 Bcf. These figures are pivotal, as they reflect the impact of warmer-than-usual temperatures and increased wind energy generation on natural gas demand.

Weather Forecasts and Market Sentiment

The market’s cautious optimism is partially buoyed by the possibility of colder weather in January, which could spike demand. However, the holiday season may see traders adjusting positions, potentially leading to short-term volatility.

Production and Price Trends

Record gas production and high storage levels continue to exert downward pressure on prices. Despite this, long-term expectations suggest rising U.S. gas demand and prices, subject to developments in LNG export facilities.

Short-Term Outlook: Leaning Bearish

Considering the expected EIA report figures and current market conditions, the short-term outlook for U.S. natural gas futures appears bearish. The anticipated lower-than-average draw, coupled with ongoing supply robustness and mild weather forecasts, points towards potential subdued activity in the near term, pending any unexpected shifts in weather or demand trends.

Technical Analysis

The current daily price of Natural Gas at 2.486 is trading below both its 200-day moving average of 3.250 and its 50-day moving average of 3.082. This indicates a bearish sentiment in the market, as the price remains under these key average thresholds.

Additionally, the current price is below the minor resistance level of 2.590 and well beneath the main resistance at 2.690. Without specified support levels, the current price suggests a lack of immediate support, potentially leading to further downside risk.

The positioning of Natural Gas relative to its moving averages and resistance levels portrays a market trending downwards, with a bearish outlook in the short term.