Natural Gas Price Fundamental Daily Forecast – Relief Rally after Neutral EIA Storage Report

Natural gas futures settled higher on Thursday following the release of a neutral weekly government storage report. The price action suggests that investors have already moved on from the report and are now focusing on the return of hot weather during the last week of August. Improving demand for LNG could also be underpinning prices as well as lower production.

At 09:28 GMT, September natural gas futures are trading $2.183, up $0.001 or +0.05%.

US Energy Information Administration Weekly Storage Report

The EIA reported Thursday that domestic supplies of natural gas rose by 58 billion cubic feet for the week ending August 7. That was slightly higher than the average increase of 51 billion forecast by analysts polled by S&P Global Platts.

Total stocks now stand at 3.332 trillion cubic feet, up 608 billion cubic feet from a year ago, and 443 billion cubic feet above the five-year average, the government said.

The government report also showed that broken down by region, the Midwest added 26 Bcf into storage, and the East added 20 Bcf. Mountain and Pacific inventories each grew by less than 5 Bcf, while the South Central region reported a net injection of 5 Bcf, which included a 1 Bcf build into salt facilities and a 5 Bcf build in nonsalts.

Analyst Reaction to EIA Report is Supportive

“It was a very mild week with good wind,” and a 58 Bcf injection is “right on neutral” from a supply/demand perspective  given the weather, said one market observer on The Desk’s online energy platform Enelyst.

Natural Gas Intelligence (NGI) reported that the analyst noted that last September and October, the gas market saw injections that were 4 Bcf/day loose, “or worse.” This September and October, however, liquefied natural gas is rebounding and production is starting to roll over. “There will be a big year/year difference.”

Analyst Stephen Schork also pointed out that “Wall Street loves natty right now. Funds are holding their largest bull position since optionsellers.com fiasco in November 2018, NGI reported.

NGI also reported that Bespoke Weather Services said the 58 Bcf build was tighter than the five-year average, “slightly, even though the build was larger.” However, its data suggests some loosening has occurred this week, “even factoring in a number in the high 30s (market is projecting higher), which could pose downside price risks.”