August natural gas is set to open unchanged Thursday morning at $2.66 as traders await storage data that is expected to confirm the pervasive contraction in the storage surplus. Overnight oil markets were mixed.
Currently, storage stands at 3,243 Bcf and by most accounts a nominal 40-plus Bcf would have to be injected weekly for the remainder of the build season to reach last year's record ending inventory of 3,953 Bcf. The 10:30 a.m. EDT release of storage figures by the Energy Information Administration is expected to show just about that level of injection.
The continued erosion of the long-term storage surplus is expected to remain intact. Last year 70 Bcf was added to storage, and the five-year average is for a 61 Bcf increase. Analysts at ICAP expect an increase of 41 Bcf, and industry consultant Bentek Energy’s flow model predicts a build of 39 Bcf. A Reuters survey of 20 traders and analysts revealed an average 39 Bcf with a range of 28 Bcf to 61 Bcf.
In mid-session Nymex trading Wednesday, Intercontinental Exchange's EIA futures contract was 37 Bcf bid at 39 Bcf offered. The contract trades in units of 1 Bcf per $1,000 of contract value.
The folks at The Desk calculate a 38 Bcf build. "As for this week, the heat kicked into gear nicely and rocked the draw situation by a huge margin," said John Sodergreen, Desk editor. "Last week's weather was 9% warmer than last year in the same week and 8% warmer than the five-year average. Since May, the temps have been about 8% warmer than last year. Recall, however, that last year, this week, EIA delivered a massive reclassification and the market went nutty "
In addition to the high pressure and warm temperatures enveloping the central U.S., "a low-pressure system will bring active weather to the Midwest on Thursday, while monsoonal thunderstorms fire up across the Southwest," said Kari Strenfel, a Wunderground.com meteorologist.
"An area of low pressure will move eastward over the upper Great Lakes. This system and a cold frontal boundary will produce showers and thunderstorms across the northern Plains, the upper Mississippi Valley and the Midwest. Severe thunderstorms will be possible in eastern Wisconsin and Michigan. These thunderstorms will be capable of producing large hail, dangerous straight line winds and isolated tornadoes."
In overnight Globex trading September crude oil shed 13 cents to $45.62/bbl and September RBOB gasoline rose fractionally to $1.3788/gal.