Natural Gas Price Fundamental Daily Forecast – EIA Report Expected to Show 110 Bcf Build

Natural gas futures are trading nearly flat as investors await the release of the weekly government storage report due to be released at 14:30 GMT. We can expect heightened volatility with the release of the report but the direction of the market will be determined by the accuracy of the estimates.

The price action this week suggests traders are already anticipating another triple-digit build next week due to the low demand and cooler than normal temperatures.

At 12:26 GMT, July natural gas futures are trading $2.373, down $0.006 or -0.25%.

Pockets of localized heat helped drive spot prices higher on Wednesday, but this wasn’t enough to shake out even a few of the weaker short-sellers.

Essentially, rallies are being limited and prices pressured by disappointing weather forecasts that are showing no significant heat until the final third of the month at earliest, according to NatGasWeather.

U.S. Energy Information Administration Weekly Storage Report Forecasts

Traders are looking for a 110 Bcf injection in today’s EIA report.

Bloomberg analysts are looking for injections to range between 103 Bcf to 121 Bcf, with a median of 109 Bcf. Reuters is estimating a range of 104 Bcf to 124 Bcf, with a median of 109 Bcf. ICE is looking for 110 Bcf and Natural Gas Intelligence projects a 111 Bcf build.

Last week, traders were shocked when the EIA report showed a storage injection that was at least 10 Bcf above even the highest forecast. Last year, the EIA reported a 93 Bcf injection for the similar week, while the five-year average stands at 102 Bcf.

Short-Term Weather Outlook

NatGasWeather is saying for June 6 to June 12, “A slow moving weather system will track across the South and Southeast the next several days with heavy showers and cooling with highs mainly in the 80s. The Southwest into Texas will still be very warm to hot with highs of upper 80s and 100s. A weather system across the Northwest will bring cooling, while the rest of the northern US will be most comfortable with 70s and 80s. During the middle of next week, a strong weather system will track across the northern and central US with another round of showers and cooling with highs of 60s and 70s, while also preventing widespread southern US heat with highs of mostly 80s besides the hotter Southwest. Overall, demand will be low.

Daily Forecast

Given the anticipated large build and mild temperatures, there is little reason to rally today and for that matter, over the near-term. Prices are likely to continue to weaken unless there is a surprise lower than expected build, or a major shift in the weather pattern.