November natural gas is set to open a penny higher Thursday morning at $2.48 as traders ready for a government inventory report that is expected to continue the trend of above-average storage builds. Overnight oil markets were mixed.
The 10:30 a.m. EDT release of storage data by the Energy Information Administration (EIA) will give traders an idea just how much of a surplus will be available to start the winter heating season. Currently, inventories stand at 3,538 Bcf, and all indications are that with five weeks left in the traditional injection season, a record 4 Tcf is in sight. Given the prospects of an El Nino winter, market bulls are no doubt hoping all that has been factored into the market and prices are ready to advance.
For the week ending Oct. 2, estimates are swirling around a 98 Bcf build. ICAP Energy calculates a 97 Bcf injection, and Bentek Energy is looking for a 100 Bcf increase, according to its flow model. A Reuters survey of 26 traders and analysts showed an average 98 Bcf with a range of 87 to 103 Bcf. Last year, 106 Bcf was injected and the five-year average stands at 92 Bcf.
Analyst Andrea Paltrinieri of Natgasweather.com said, "U.S. Lower 48 production is flat [Wednesday] at 71.5 Bcf and power burns are averaging around 24 Bcf." Paltrinieri is estimating a build on the low end of the scale at 94 Bcf, somewhat below market consensus. "I see greater impact on [Thursday's] number due to nuke outages and switching from coal, with more tightening compared to other weeks. I think that any number below 96 Bcf will be bullish, while any number above 100 bearish, and the trading range 96-100 neutral."
Getting to 4 Tcf might be a little more challenging as pipelines are reporting curtailments and diminished production. Genscape, a Louisville, KY-based data provider for commodity and energy markets, said, "El Paso Natural Gas will conduct maintenance at its Keystone Station in West Texas from Oct. 13 to 16, which could cut flows by nearly 350 MMcf/d. From the 13th to 15th, capacity through Keystone Station will be reduced to 163 MMcf/d from its normal 769 MMcf/d level."
In addition "Wyoming Interstate Co. is performing mechanical maintenance on their Creston Compressor Station in southern Wyoming, which will cut nearly 150 MMcf/d of production through the end of next week."
WSI Corp. in its morning six- to 10-day outlook said the "period forecast is a little cooler than yesterday's forecast over the eastern two-thirds of the nation."
In overnight Globex trading November crude oil gained 33 cents to $48.14/bbl and November RBOB gasoline fell fractionally to $1.3885/gal.