November natural gas is expected to open unchanged at $4.02 Thursday morning as traders await government storage data that is expected to show larger than normal inventory builds and at the same study weather reports that show no clear signs of inducing any major market moves. Oil markets overnight continued Wednesday's losses.
Technical bulls will be watching the 10:30 a.m. EDT release of storage inventory data by the Energy Information Administration for signs that the market can hold $4 support and perhaps establish another higher trading range than the $3.75-4.00 range in place since late July.
The consensus is for a build well into the 100 Bcf area. Last year 99 Bcf was injected, and the five-year pace stands at 85 Bcf. Ritterbusch and Associates is looking for a 99 Bcf increase, but a Reuters poll of 24 traders and analysts showed an average 107 Bcf with a range of 95-120 Bcf. Bentek Energy calculates a 107 Bcf injection as well, utilizing its flow model, largely due to reduced power burn.
"Total demand reached its lowest point since the June 27 storage week, falling to 54.7 Bcf/d on the week, down 2.3 Bcf/d week-over-week," the company said in a report. "The drop was driven by further declines in power burn demand as well as a return to seasonal res/comm levels. Most fields around the country reported stronger volumes from the previous week, with the largest movers coming from the West Region, which is expected to return to the recent injection pace with a total sample build of 7 Bcf on the week."
Not only were injections greater, but demand eased. "Total demand in the West fell 1.0 Bcf/d from the previous week, allowing for strong sample injections at PG&E and SOCAL. Power demand continued to decline slightly in the Producing Region, with a decline of 0.1 Bcf/d from the previous week to fall to 11.9 Bcf/d, the lowest average since the May 23 storage week. The drop in power burn demand prompted stronger sample injections within several fields in Bentek's sample, although total injections within the region at many of the larger fields were in line with last week's total, indicating a similar storage injection expected from the region."
Joe Bastardi in his WeatherBELL Analytics 20 Day Forecast said he sees a conflict between the ECMWF (European) model and the GFS (Global Forecast System). Nonetheless, the "bottom line is that a trough never progresses to the East Coast [and remains] in Plains next seven days, then it backs westward with time." Longer term, he said the JMA (Japan Meteorological Association) model calls for "October evolution of temperatures similar to September, colder overall centered in Plains for the front of the month with massive warmup erasing much of the cool."
In overnight Globex trading November crude oil fell $1.71 to $89.02/bbl and November RBOB gasoline skidded 5 cents to $2.3970/gal.