October natural gas is set to open unchanged Thursday morning at $2.65 as traders balance a somewhat warmer near-term weather outlook with a higher-risk government morning storage report. Overnight oil markets were mixed.
Overnight weather model runs turned slightly warmer, but greater uncertainty arose during the back half of the forecast period. WSI Corp. in its Thursday morning report to clients said, "The latest six-10 day period forecast depicts a shift with the pattern. The forecast is cooler than yesterday's forecast across the Northwest, Rockies and central U.S. However, the southern and eastern U.S. are a bit warmer. PWCDDs are up 1 to 42.6 for the CONUS.
"Forecast confidence is average at best today. Models are in better agreement early in the period, but significant differences emerge between the op models by the end of the period." Risks include "the forecast waiver[ing] in either direction, especially during the back half of the period given the spread in the models. The central U.S. has the greatest downside risk. The West Coast has the greatest upside risk."
All eyes will be glued to screens when the Energy Information Administration releases its 10:30 a.m. EDT report on natural gas storage. Not only will traders have to deal with the uncertainty embedded in the number itself, but also the unknown factor of a 9 Bcf adjustment by ANR Pipeline.
Drew Wozniak, vice president at United ICAP, forecasts an implied flow build of 94 Bcf "with a (my probability is 30%) chance that the net change will be +103 if ANR reported their reclassification of 9 Bcf from base to working gas. It is my understanding that the reporting of reclassifications to the EIA is at the discretion of the storage owner, so when exactly this 9 Bcf of increased storage is reflected in the EIA's report is not exactly known," he said in a report to clients.
Last year, 79 Bcf was injected and the five-year pace stands at 60 Bcf. Other estimates include First Enercast at 90 Bcf, and IAF Advisors at 93 Bcf including the ANR adjustment. A Reuters survey of 24 traders and analysts revealed an average 88 Bcf with a range of 79 to 97 Bcf.
The National Hurricane Center in its 5:00 a.m. EDT report said Tropical Storm Fred had regained a little strength. It was reported 690 miles west of the Cape Verde Islands and was sporting winds of 45 mph. It was headed west-northwest at 8 mph, and projections had it eventually turning to the north.
In overnight Globex trading October crude oil fell a penny to $46.24/bbl and October RBOB gasoline gained a penny to $1.4393/gal.