June natural gas is expected to open 3 cents lower Thursday morning at $2.90 as traders anticipate the release of government data expected to help them get a grip on just how well supplied the market is likely to be during the injection period. Overnight oil markets were mixed.
Industry analysts have forecast season-ending storage at record levels, north of 4 Tcf, and the 10:30 a.m. EDT release of data by the Energy Information Administration should give traders and analysts insight into whether that figure is really in the cards. Last year 101 Bcf was injected, and the five-year average is for an 82 Bcf increase.
Estimates for this week's figure are closely bunched just below 120 Bcf. Ritterbusch and Associates is looking for a build of 109 Bcf, and analysts at ICAP Energy calculate a 116 Bcf increase. A Reuters poll of 26 traders and analysts indicated a sample mean of 116 Bcf with a range of 99 Bcf to 135 Bcf.
Industry consultant Genscape combined the output from both its supply-demand model and pipeline model and came up with a 119 Bcf injection. "For this week, our pipeline model has a 118 Bcf injection, while the supply-demand model is at 121 Bcf. The S-D model is based on production estimated to have run at 72.8 Bcf/d," the company said in a report.
"Production peaked early in the week at 73.4 Bcf/d then fell to a low of 72.1Bcf/d on gas day May 5 before rebounding towards the tail end of the week. Production for this storage week is more than 4.5 Bcf/d greater than last year's same storage week. Demand is estimated to have averaged 58.1 Bcf/d with power now accounting for more than 50% of demand. Last week's power demand (non-weather adjusted) averaged 22.33 Bcf/d, the highest power demand has run in gas week 19 since 2012."
Going forward, weather-driven demand is going to be hard to come by. The National Weather Service for the week ended May 16 forecasts fewer degree days for both heating and cooling in major U.S. markets. New England is forecast to see a combined 46 HDD (heating degree days) and CDD (cooling degree days) or 23 fewer than normal. New York, New Jersey and Pennsylvania are expected to experience 44 degree days, or 13 fewer than normal, and the greater Midwest from Ohio to Wisconsin is seen enduring 43 degree-days or 25 fewer than its seasonal norm.
For the following week a Reuters poll shows an average 105 Bcf with a range of 90 Bcf to 116 Bcf. That would compare to a build last year of 106 Bcf and a five-year average of 89 Bcf.
In overnight Globex trading June crude oil fell 21 cents to $60.29/bbl and June RBOB gasoline gained a penny to $2.0512/gal.