April natural gas is expected to open unchanged Thursday morning at $2.72 as traders deal with unsettled weather and government figures that are expected to show the first storage build of the season. Overnight oil markets jumped.
Cash traders Thursday will not only have to deal with a government storage report but also an advancing cold front and the subsequent drop in temperatures expected to follow. "Showers and thunderstorms will move across the eastern states on Thursday as a strong low-pressure system and associated cold front advance eastward over the Mississippi River Valley," said forecaster Wunderground.com. "The system will continue pulling abundant moisture and energy northward from the Gulf of Mexico, allowing for moderate to heavy rainfall to develop from the Northeast through the Gulf Coast.
"Behind this system, cold air will filter in from Canada, bringing cooler temperatures to the center of the nation on Thursday. Expect highs to range from 10 to 20 degrees below seasonable for the Plains and the Eastern Valleys on Thursday. Out West, another trough of low pressure dips into the Pacific Northwest, pushing more moisture onshore from the Pacific Ocean. This will maintain widespread scattered rain showers across parts of Washington and far northern Oregon. Significant precipitation is not anticipated."
The 10:30 a.m. EDT release of storage data by the Energy Information Administration is likely to show the first injection of the year and about a week and a half ahead of the end of the traditional withdrawal season. Observers see increased production from the Northeast and the resulting lower storage pulls causing the early build.
Bentek Energy said, "Production has picked up over the past two weeks and averaged 72.5 Bcf/d during the Mar. 20 storage week, which is an increase of more than 0.5 Bcf/d from the previous week's average. Production in the Northeast is driving the recent growth, mostly due to strong volumes hitting REX and pushing back into the Midwest.
"The diversification of supply in the Midwest is allowing for smaller withdrawals from facilities in the region, as evidenced by the weak withdrawal levels from ANR over the past two weeks. Furthermore, the increased supply in the region is allowing for the salt dome facilities to fill rapidly during the week, which is a trend that is likely to continue this shoulder season."
Other estimates of the storage withdrawal include First Enercast Financial at a 23 Bcf build, and Citi Futures Perspective calculates unchanged storage. A Reuters survey of 22 traders and analysts resulted in an average 6 Bcf build with a range of minus 7 Bcf to 25 Bcf.
In overnight Globex trading May crude oil rose $1.60 to $50.81/bbl and May RBOB gasoline added 4 cents to $1.8694/gal.