February natural gas opened approximately 6 cents lower Thursday morning at $2.21 as traders factor in what looks to be a relatively mild second-half of the month ahead of a fresh government inventory report. Overnight oil markets rose.
Analysts will be taking a hard look at the 10:30 a.m. EST release of storage figures from the Energy Information Administration for the week ending Jan. 8. For only the second time this heating season a triple-digit withdrawal is expected, but estimates pale in comparison to last year's 220 Bcf usage but are in line with the five-year average draw of 178 Bcf.
IAF Advisors is looking for a withdrawal of 177 Bcf, and industry consultant Bentek Energy calculates a decline of 180 Bcf utilizing its flow model. A Reuters poll of 21 traders and analysts revealed a -178 Bcf average with a range from -158 Bcf to -192 Bcf.
Forecasters said overnight model runs of the pivotal late-January weather window moderated. "[Thursday's] 11-15 day period forecast depicts near to above average conditions across the eastern two thirds and is generally warmer than yesterday's forecast," said WSI Corp in its morning report to clients. "CONUS GWHDDs are down 4.7 and are now forecast to be 136.1 for the period. Forecast confidence is near average today as medium range models are in reasonably good agreement with a warmer more El Nino like pattern. There are technical and timing differences with potential storm systems that can influence anomalies.
"A more El Nino and/or +PNA [Pacific North American] driven pattern offers a risk to the cooler side across the southern US. The West Coast and No. Rockies have a slight upside risk."
For followers of Market Profile, the Monday-Tuesday trading rule for weekly price targets is still in play. Tom Saal, vice president at FC Stone Latin America LLC, said to look for the market to test [Wednesday's] value area at $2.288 to $2.258 before moving on and testing a second value area at $2.405 to $2.387. The Monday-Tuesday rule requires traders to follow a market breakout of the initial balance, $2.423 to $2.255, either higher or lower. Wednesday traded as low as $2.256. Saal places trading targets higher at $2.507 and trading targets lower at $2.171.
In overnight Globex trading February crude oil rose 61 cents to $31.09/bbl and February RBOB gasoline rose 2 cents to $1.0757/gallon.