November natural gas is set to open 2 cents higher Thursday morning at $3.06 as traders expect a government report to show continued historically low additions to supply. Overnight oil markets were mixed.
Futures traders are optimistic now that November futures are perched solidly above $3. "$3.04 is a good close, and we are looking at $3.08 to $3.12 on the next push up," a New York floor trader told NGI after Wednesday's close.
"I think it has a little more to go. I think we'll see the $3.18 to $3.19 area and then see how it acts.”
Should Thursday morning's Energy Information Administration (EIA) storage report prove constructive, a move to $3.08 would certainly be in striking distance. Last year 96 Bcf was injected, and the five-year average comes in at 95 Bcf. This week's report is expected to continue the trend of below-normal builds.
A Reuters poll of 19 traders and analysts revealed an average 70 Bcf with a range of 62 to 77 Bcf. IAF Advisors calculated a 74 Bcf injection, and industry consultant Bentek Energy, utilizing its flow model, is looking for a build of 75 Bcf.
For the moment, Hurricane Matthew hasn't prompted any decrease in power demand. "While many Florida cities along the Atlantic Coast are currently under hurricane warnings, there does not appear to be demand destruction occurring," said industry consultant Genscape in a Thursday morning report. "Demand in Florida dipped day over day from the 5th to the 6th, especially nominations to power plants and citygates; however, figures are still within the seven-day average.
"Looking to other potentially impacted markets, temperatures in Atlanta, Charleston and Raleigh are forecast to hold steady through the storm. Demand in most SEMA [Southeast Mid-Atlantic] markets has begun the slow descent typical of the shoulder season. Temps are no longer scorching, and this upcoming storm will not be able to suppress temps into heating degree territory.
"Combined with the weekend's general impact on demand, weather and demand figures should remain reasonably stable."
At 8 a.m. EDT Thursday the National Hurricane Center (NHC) reported that Hurricane Matthew was 215 miles southeast of West Palm Beach Florida and moving to the northwest at 12 mph. Maximum sustained winds were 125 mph, and NHC projected that Matthew would hit the Bahamas before migrating up the east coast of Florida, Georgia and the Carolinas.
In overnight Globex trading November crude oil rose 26 cents to $50.09/bbl and November RBOB gasoline dropped a penny to $1.4854/gal.