Natural gas futures are edging higher shortly before the release of the U.S. Energy Information Administration weekly storage report. After last Friday’s steep plunge, the market has consolidated into a technical triangle chart pattern that tends to indicate investor indecision and impending volatility. The chart pattern is being created by offsetting weather patterns that are helping to curtail both buying and selling.
At 14:51 GMT, January natural gas futures are trading $2.428, up $0.029 or +1.17%.
Natural Gas Intelligence (NGI) is saying, “The major weather models continued to disagree on the forecast for mid-December.” Furthermore, “Predictions suggested EIA will report a much smaller-than-normal withdrawal for the week ended November 29, although the range of estimates is wide.”
US Energy Information Administration Weekly Storage Report Estimates
The consensus is for a 22 Bcf decline in natural gas storage.
Reuters is forecasting withdrawal estimates ranging from 8 Bcf to 33 Bcf, with a median pull of 24 Bcf. Bloomberg analysts are calling for withdrawals ranging from 8 to 20 Bcf, with a median pull of 25 Bcf. Natural Gas Intelligence predicts a pull of 15 Bcf. The EIA report will be released at 15:30 GMT.
Last year, the EIA recorded a 62 Bcf withdrawal in the same week, while the five-year average stands at 41 Bcf.
NatGasWeather is blaming the Thanksgiving holiday for the wide range of estimates. “It was mild versus normal over the eastern two-thirds of the U.S., while colder versus normal over the West” during the report period, the forecaster said. “Our algorithm expects minus 15-16 Bcf, slightly bearish.”
Short-Term Weather Outlook
NatGasWeather said the GFS model is coming in “quite cold” of the northern Lower 48 for the December 11 to 17 time frame. However, the European model showed a “quite seasonal” pattern after December 11-12, putting it a “massive” 40 Heating Degree Days milder than the GFS.
“Clearly, one of them is wrong,” NatGasWeather said. “…If the GFS is correct, weather sentiment should be considered bullish, but since the GFS was wrong last time, it has the burden of proving it.”
This article was originally posted on FX Empire
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