September natural gas is set to open 2 cents higher Thursday morning as traders study weather forecasts showing little change and anticipate a government storage report to show inventories growing at less than longer-term seasonal norms. Overnight oil markets were narrowly mixed.
Weather models changed little overnight. "No significant changes are noted in the front of the forecast," said Matt Rogers, president of Commodity Weather Group in its morning report to clients. "The East Coast has edged cooler for the one- to 10-day, while the Midwest is about flat to slightly warmer. No significant changes are noted for the West and South through the front ten days.
"While model net overall changes since yesterday morning are also nearly flat (European/Canadian lost slight demand over past 24 hours and American gained), we are starting to see some bigger divergence emerging in the 11-15 day. The American ensemble guidance sends a cool trough into the West Coast during the 11-15 day which accelerates the warming process for the middle to eastern thirds of the U.S."
Last year the Energy Information Administration (EIA) reported a 3 Bcf withdrawal in its weekly inventory report, but this year analysts are expecting a somewhat larger build, but well behind the five-year pace which stands at 44 Bcf. This week's estimates are falling in the low 20 Bcf range and, if correct, will continue to show a shrinkage in the year-on-five-year surplus.
JP Morgan calculates a build of 18 Bcf, and Stephen Smith Energy is looking for an injection of 23 Bcf. A Reuters survey of 24 traders and analysts showed a sample mean of 21 Bcf with a range of +13 Bcf to +37 Bcf.
Tom Saal, vice president at FCStone Latin America LLC in Miami in his work with Market Profile says to expect the market to test Wednesday's value area at $2.828 to $2.814. Market Profile is a breakout trading system, and Saal says to follow any break above or below the initial balance, which he pegs at $2.860 to $2.761. Lastly he expects the market to test a second value area at $2.983 to $2.947.
In overnight Globex trading September crude oil gained 18 cents to $49.77/bbl and September RBOB gasoline fell fractionally to $1.6445/gal.