Natural Gas Price Fundamental Daily Forecast – Storage Concerns Underpinning Prices

Natural gas futures are trading flat early Tuesday after yesterday’s early attempt to drive prices sharply lower was stopped by aggressive speculative buying. The price action comes as no surprise since the trend is up and the bullish traders are still not convinced record production from now until late October will be enough to shrink the supply deficit.

At 0818 GMT, October Natural Gas is trading $2.937, up $0.001 or +0.03%.

One catalyst which led to yesterday’s rapid turnaround was trader reaction to estimates of a light storage injection this week. Additionally, although there are still pockets of heat in the country, the weather forecasts call for mostly cooler temperatures.

Forecast

The market could go into a standstill until Thursday’s EIA report with storage concerns providing a floor and record production and favorable weather limiting gains.

Storage

Total stocks now stand at 2.354 trillion cubic feet, down 671 billion cubic feet from a year ago and 572 billion below the five-year average, the government said.

Production

Genscape, Inc. said estimated production during the August 10-11 weekend grew to 80.97 Bcf/d, about 0.8 Bcf/d above last week and month-opening levels, and within 2 MMcf/d of setting a record high.

Short-Term Weather Outlook

According to NatGasWeather.com for August 10-16, “Weather systems with showers and cooling will track through the Midwest and east-central U.S. the next few days, including deep into Texas and the South with heavy rains into next week with highs of upper 70s and 80s, easing national demand. The West remains hot with highs of 90s to 100s, although with some cooling into the Northwest. Late next week, hot high pressure will gain some ground across the South and East. Overall, national demand will be high, easing to moderate.”

Early EIA Estimate

Early guesses are coming in at between 17 Bcf and 42 Bcf with the consensus calling for a 29 Bcf build for the week-ending August 10, well below the five-year average of a 56 Bcf increase for the same week.

Technically, if daily chart indicates that if the selling pressure continues, the October natural gas futures market is likely to break into $2.857 to $2.832 before buyers are likely to return.