Natural Gas Price Fundamental Daily Forecast – EIA Weekly Storage Report Expected to Show 127 Bcf Draw

Natural gas futures are trading higher on Thursday shortly before the release of the government‘s weekly storage report at 15:30 GMT. Today’s move was strong enough to fill in the gap caused by Mondays sharply lower opening. Its early session strength suggests a possible shift to colder in the 10 to 14 day forecast.

At 13:20 GMT, February natural gas futures are trading $2.498, up $0.076 or +3.14%.

US Energy Information Administration Weekly Storage Report

The EIA is scheduled to release its weekly storage report at 15:30 GMT. Analysts are expecting another larger-than-normal draw, with major surveys ahead of the report clustering around a pull in the mid-120s Bcf.

Last week, the EIA reported a 152 Bcf draw that lowered stocks to 3,574 Bcf, which is 278 Bcf above year-ago levels and 218 Bcf above the five-year average.

According to Natural Gas Intelligence (NGI), for the coming EIA report, a Bloomberg survey of nine analysts showed an unusually wide range of withdrawal estimates from as low as 88 Bcf to as large as 150 Bcf, with a median of 126 Bcf.

A Wall Street Journal poll showed estimates within that same range, with an average of 129 Bcf. A Reuters poll of 16 market participants showed withdrawals as low as 85 Bcf, but the median was near those of other surveys, at 125 Bcf. NGI pegged the pull at 124 Bcf.

Last year, the EIA recorded an 87 Bcf draw for the similar week, while the five-year average is a 102 Bcf draw.

According to NatGasWeather for December 31 to January 6, Chilly conditions linger across the northern U.S. with morning widespread lows of 0s to 30s. A chilly system is bringing rain and snow to Texas and the South Plains with highs of 30s to 50s, while a second system brings showers to the Northwest.

The rest of the U.S. will be mostly mild with highs of 40s to 70, locally 80s in Florida. Additional weather systems will track across the U.S. this weekend and next week, although with only slightly cool highs of 30s to 50s. Overall, moderate national demand Thursday-Friday, then low this weekend and next week.

I don‘t expect much of a reaction to the EIA report unless there is a major miss. Instead, investors will be trying to position themselves for Monday’s opening which could prove to be as volatile as last Mondays opening.

The short-term range is $2.775 to $2.263. Its retracement zone at $2.519 to $2.579 is the first upside target. The 50% level at $2.519 was tested earlier today when prices surged to $2.522. This move also filled the gap.

The near-term direction of the February natural gas market will be determined by trader reaction to the retracement zone at $2.519 to $2.579.

A bearish tone should develop on a sustained move under $2.519, and a bullish tone is likely to develop on a sustained move over $2.579.