Natural Gas Price Fundamental Daily Forecast – Nothing in Weather Forecast to Jumpstart Rally

Natural gas price are inching higher shortly before the regular session opening on Friday after falling apart the previous session following a bearish storage report that blew away the estimates. Thursday’s sell-off delivered a crushing blow to the bulls who were hoping a steady report would jumpstart a rally while they waited for the emergence of a heat wave at the end of June/early July.

At 10:05 GMT, August natural gas futures are trading $2.176, up $0.010 or +0.46%.

Falling spot prices were also a drag on futures prices, but the biggest bearish influence was the huge miss on storage. The weekly government report delivered results that came in at least 10 Bcf higher than most analysts had expected.

U.S. Energy Administration Weekly Storage Report

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 115 billion cubic feet (Bcf) for the week-ended June 14.

Bloomberg estimated an injection range between 96 Bcf and 113 Bcf, and a median of 105 Bcf. Reuters forecast a range of 96 Bcf to 115 Bcf, with a median of 105 Bcf. Natural Gas Intelligence predicted a build of 105 Bcf.

Last year, the EIA report showed a 95 Bcf injection, while the five-year average injections stands at 84 Bcf.

Total stocks now stand at 2.203 trillion cubic feet (Tcf), up 209 Bcf from a year ago, but 199 Bcf below the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for June 20 to June 26, “Several weak weather systems continue to produce showers and thunderstorms across the country, focused over the most comfortable across the northern and interior US with highs of 70s and 80s. It remains hot around the periphery with highs of 90s to 100s across California and the Southwest. 80s to 90s across Texas, the South, Southeast, and up the Mid-Atlantic Coast. The weekend will bring cooling across the Northwest & Rockies, while next week will bring increasing heat across the southern 2/3 of the US with 90s and 100s. Overall, demand will be increasing to moderate this weekend and next week.”

Daily Forecast

The pattern of consolidation then weakness is likely to continue over the near-term until there is a forecast calling for a lingering heat dome. Periodic bouts of scattered pockets of hot temperatures will not be enough to trigger a lasting rally. Oversold technical conditions could produce a short-covering rally, but this type of move is only expected to set-up fresh shorting opportunities.