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February natural gas was set to open about a penny higher Thursday at around $3.023 as the market turned its attention to the 10:30 a.m. EDT release of the Energy Information Administration's (EIA) weekly storage inventory report.
This week's storage report is the first to gauge the impact of the extreme frigid temperatures that began moving in over the Christmas holiday, driving up heating demand and cash prices for most of the eastern two-thirds of the Lower 48 states.
Market predictions were pointing to a withdrawal well above 200 Bcf for the week ended Dec. 29.
The average from a Reuters survey of traders and analysts had EIA reporting a 221 Bcf withdrawal from U.S. gas stocks, a number that would blow away the year-ago withdrawal of 76 Bcf and the five-year average -99 Bcf. Responses ranged from -205 Bcf to -243 Bcf.
A Bloomberg Survey similarly showed an average -221 Bcf for the period, with a range of -205 Bcf to -235 Bcf.
PointLogic Energy was calling for EIA to report a 220 Bcf withdrawal based on "demand gaining just over 18.2 Bcf/d week-on-week. The increase in demand was spread across the entire country, with the largest gain coming from the Midcontinent region.”
Stephen Smith Energy Associates was calling for a withdrawal of 227 Bcf, while IAF Advisors analyst Kyle Cooper predicted a withdrawal of 211 Bcf.
Last week, EIA reported a 112 Bcf withdrawal.
As for the long-range weather outlook, "the forecast is mostly similar to previous expectations...showing a coverage of above normal temperatures in the West but expanding toward the Midcontinent as the period progresses," MDA Weather Services said in its morning 11-15 day report.
"Below-normal temperatures are associated with a round of Canadian high pressure into the Midcontinent early and migrating eastward," MDA said. "The key feature to watch at this lead time is a Gulf of Alaska low, a feature in which the European model is deepest with and has associated Pacific flow being faster to warm the national pattern versus the forecast and the colder" Global Forecast System model.
From a technical perspective, ICAP Technical Analysis analyst Brian LaRose said, "Despite the arrival of winter weather the initial surge off our $2.553-2.521 support zone has failed to generate enough thrust for natural gas to achieve escape velocity.
"So, is natural gas about to fall back to earth? Or can the bulls ignite stage two? We still peg $3.089-3.130 as the gatekeeper. We will be looking for a march to the $3.432-3.477 neighborhood only if the bulls can clear this band of resistance."
February crude oil was set to open about 11 cents higher at around $61.74/bbl Thursday, while February RBOB gasoline was down slightly at around $1.7962/gal.