December natural gas is expected to open 6 cents higher Thursday morning as traders put the final touches on their estimates of storage at the traditional end of the injection season. Overnight oil markets were mixed.
With little in the way of heavy heating demand on the horizon, the consensus is leaning toward storage builds well past the October end of the injection season. Tim Evans of Citi Futures Perspective calculates a 69 Bcf increase of the week ended Oct. 30, somewhat above consensus figures in the high 50 Bcf area, but Evans is also looking at builds for the next three weeks.
Storage is currently at 3,877 Bcf, and if his estimates are correct, by the third week in November storage will be at a record 4,091 Bcf.
Others stretch it even further. John Sodergreen, editor of Energy Metro Desk, said, "The way things are currently going, we will be very close to seeing a build in December (of all things); the weather gods are suggesting things are getting nippy (finally) in key areas, but from our vantage, the December build anomaly may be more than possible."
Last year, 90 Bcf was injected and the five-year pace stands at 58 Bcf. PIRA is estimating a 57 Bcf increase, and industry consultant Genscape is calling for a 61 Bcf build. A Reuters survey of 23 traders and analysts revealed a sample mean of 59 Bcf with a range of 52 to 69 Bcf.
The argument that the risk this time of year is for leaner builds and (presumably) higher prices is not resonating well. "We're not buying it this year. Our Consensus came in at 57 Bcf for this week's report and the survey index came in at 58 Bcf. The spread between the three categories we track was tight at 1 Bcf. As we noted, the editor sees a little high-side risk, but not much. The 58-61 Bcf tight range should be the game this week," Sodergreen said.
The near-term weather outlook has changed little. WSI Corp. in its six- to 10-day outlook said, "Thursday's] 6-10 day forecast is similar to yesterday's forecast with more mild conditions. The southern and eastern US are cooler, but the western and central U.S. is warmer. These differences offset each other and GWHDDs are almost unchanged as they are only down 0.1 to 73.8 for the period."
In overnight Globex trading December crude oil gained a penny to $46.33/bbl and December RBOB gasoline shed 2 cents to 1.3766/gal.