Natural Gas

Natural Gas Price Fundamental Daily Forecast – Stronger Ahead of EIA Report on Jump in LNG Demand

Natural gas futures are trading higher on Thursday as traders position themselves ahead to the government’s weekly storage report, due to be released at 14:30 GMT. The rally is likely being fueled by the report or increased demand for liquefied natural gas since the weather forecasts are offer little support for prices.

At 11:47 GMT, December natural gas futures are trading $3.252, up $0.063 or +1.985.

Both the American and European models made sizeable warmer changes on Wednesday, according to Bespoke Weather Services. The American model, which had been much colder, lost even more demand in the latest run to better align with its European counterpart.

“Once again, the changes come thanks to a western shift regarding placement of the upcoming cold, resulting in much less impact in the key areas of the Midwest and East,” Bespoke said. “This now places the 15-day period as a whole back below normal rather easily.”

Bespoke’s forecast leans toward the European model, given the LaNina base state. The late-month pattern shows less potential for notable cold as well, according to the forecaster. This would align with its theory of a warmer start to November if it’s upheld.

“This is also consistent with what the climate models have been suggesting heading into November, having never wavered, at least so far.”

US Energy Information Administration Weekly Storage Report

Natural Gas Intelligence (NGI) reports that “Ahead of the EIA report, a Wall Street Journal survey of 11 analysts expected injections to range from 47 Bcf to 65 Bcf, with an average build of 56 Bcf. A Bloomberg survey of seven market participants had a tighter range of projections, which produced a median of 53 Bcf. Reuters polled 14 analysts, whose estimates ranged from increases of 46 Bcf to 74 Bcf, with a median injection of 55 Bcf. NGI estimated a 54 Bcf injection.”

Last year, the EIA recorded a 102 Bcf increase in storage for the similar week, and the five-year average stands at 87 Bcf. Total working gas in storage as of October 2 stood at 3,831 Bcf, which is 444 Bcf higher than last year at that time and 394 Bcf above the five-year average.

Daily Forecast

The early price action suggests traders are moving on from the short-term weather outlook and looking forward to an expected jump in LNG demand next month as curtailed supply returns to the market. Lingering above average temperatures could put a lid on prices, however. The best combination for the bulls will be cold temperatures and a surge in LNG demand.

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Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.