How do you construct a $100k portfolio, using just ETFs and futures? Find out in the new Top Dogs series.
tastytrade logo
uploaded image

Jun 10, 2021

Natural Gas Forecast: EIA Storage Report in Focus After Bullish Export Outlook

By:Thomas Westwater

Natural Gas Forecast – Talking Points

  • Bullish EIA Short-Term Energy Outlook bolsters spot prices

  • Strong liquified natural gas (LNG) exports expected to continue

  • Price recaptures September trendline as technical posture improves

Natural gas prices are extending a move higher from earlier this week when the US Energy Information Administration’s (EIA) monthly Short-Term Energy Outlook bolstered its price forecast for the heating gas. Per the report, the average Henry Hub spot price for 2021 is $3.07/MMBtu, up from last month’s price of $3.05.

The EIA cites a modest decline in natural gas’s share of electricity power generation in the US, falling to account for 36% of total energy generated in 2021 from 39% in 2020. Due to this, US natural gas consumption is anticipated to fall 0.5% to 82.9 billion cubic feet per day (Bcf/d) in 2021 from last year. Coal is forecasted to soak up some of that output gap, due in part to higher prices.

Strong liquefied natural gas (LNG) exports are another driver behind the outlook from the EIA’s report. Indeed, LNG exports have been a strong tailwind for spot prices, with rising European and Asian demand supporting US outflows. In fact, exports are at a record high level following years of rising foreign demand for the heating product (See chart below).

Thursday will see the EIA’s Weekly Natural Gas Storage Report cross the wires, with analysts looking for a 99 billion cubic feet (Bcf) build in natural gas stocks for the week ended June 04. Inventory builds are typically seen during an injection season, where underground storage is increased during the off-season heating cycle. A weaker-than-expected rise in storage may help underpin prices in the short term.


Chart created with TradingView

Natural Gas Technical Outlook

Natural gas price gains helped to recapture a trendline from the September swing low, which may act as support moving forward. The 2021 swing high at 3.316 will likely be a major test should prices continue to run higher. To the downside, the 20-day Simple Moving Average (SMA) is a possible area of support, with the rising 50- and 100-day SMAs below that.

While the upside appears to be the path of least resistance following the trendline recapture, negative divergences in the Relative Strength Index (RSI), as well as the MACD oscillator highlight possible weakening of momentum (highlighted in the chart below by the green lines). That said, breaking into a new yearly high will likely be a tall task even with the current strong technical posture.

Natural Gas Daily Chart


Chart created with TradingView


·      Just getting started? See our beginners’ guide for FX traders

·      What is your trading personality? Take our quiz to find out

·      Join a free webinar and have your trading questions answered

·      Subscribe to the DailyFX Newsletter for weekly market updates

Written by Thomas Westwater, Analyst for
To contact Thomas, use the comments section below or
@FxWestwater on Twitter

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on 

tastytrade is a trademark/servicemark owned by tastytrade.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).

tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

© copyright 2013 – 2022 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.