June natural gas was set to open Thursday about 1.6 cents lower at around $2.799/MMBtu, with the market turning its attention to the 10:30 a.m. ET release of potentially pivotal government storage data.
Estimates for the Energy Information Administration (EIA) weekly natural gas storage report show the market expecting a triple-digit injection into Lower 48 gas stocks for the week ending May 11.
A Reuters survey showed traders and analysts on average anticipating a 105 Bcf build for the period, with responses ranging from 99 Bcf to 118 Bcf. A Bloomberg survey produced a median build of 107 Bcf, with responses ranging from 87 Bcf to 110 Bcf.
Last year, EIA recorded a 64 Bcf build for the period, and the five-year average is an 87 Bcf injection.
ION Energy called for a 103 Bcf build, while Price Futures Group estimated an injection of 105 Bcf. Intercontinental Exchange EIA storage futures settled Wednesday at an injection of 105 Bcf.
“June natural gas prices have just ticked lower overnight as once again we see a stronger strip supporting a weak prompt month contract,” Bespoke Weather Services said. Weaker cash prices Wednesday likely drove “weakness at the front of the strip, yet the rest of the strip was quite strong on production decreases from seasonal maintenance.”
Looking at the planned EIA report, “any print that is above our 106 Bcf estimate should quickly break $2.80 support that may try and hold into the print,” potentially putting $2.75 in play, Bespoke said. Meanwhile, “a surprise under 100 Bcf would put $2.87 at risk. Generally, we expect the bias remaining slightly to the downside given weather that is not quite impressive.”
Still, temporary production declines and calls for a smaller injection in next week’s report have helped limit downside risk, and a storage number close to expectations would likely leave prices range-bound, according to the firm.
“Today is a big day for natural gas,” Price Futures Group senior analyst Phil Flynn said in a note Thursday. “The bulls have ridden the anti-Goldilocks market. It was either too cold or too hot, not allowing the record U.S. production to show up in storage. Yet now, the weather may be just right, so the bulls need a bullish report to keep the drive alive. If not, it is likely that a spring top in the market is in.”
NatGasWeather.com said the EIA report period featured warmer than normal conditions over almost the entire country save for parts of Texas and Florida, adding that its algorithm points to a build of 104-105 Bcf.
“Regarding the overnight weather data, only slight changes but still with the second half of May on track to play out mostly comfortable” for the northern United States and “very warm to hot” over the southern part of the country, NatGasWeather said Thursday. “There will be areas of heavy showers and thunderstorms, especially over the Southeast, but with limited cooling.
“When averaged on weekly time scales, most of the country will be warmer than normal into early June, preventing builds from coming in much larger than five-year averages.”
June crude oil was set to open Thursday about 55 cents higher at around $72.04/bbl, while June RBOB gasoline was trading fractionally higher at around $2.2591/gal.