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Near-Term Cool Firming Futures; April Called A Penny Higher

April natural gas is expected to open a penny higher Thursday morning at $1.88 as traders balance a government report that is expected to show little, if any, withdrawals from storage, with supportive near-term weather. Overnight oil markets were mixed.

Natural gas inventories currently stand at 2,479 Bcf and the year-on-year surplus is at a voluminous 911 Bcf. Estimates for the week ended March 11 are coming in around flat, but last year 88 Bcf was withdrawn from storage, and the five-year pace stands at an 81 Bcf pull. The year-on-year surplus could top 1.0 Tcf with the release of Thursday's storage figures.

Analysts at ICAP Energy are calculating a 0 Bcf change in inventories, and IAF Advisors is expecting a 3 Bcf decline. A Reuters survey of 23 traders and analysts resulted in a range from -19 Bcf to +14 Bcf with an average 2 Bcf withdrawal.

Industry consultant Bentek Energy forecasts a 4 Bcf withdrawal utilizing its flow model. "Week-over-week, total U.S. demand estimates averaged about 8 Bcf/d lower than the previous week while Canadian imports and LNG sendout combined totaled about 5 Bcf less over the course of the week," Bentek said. "Exports to Mexico plus LNG feed gas estimates totaled about 2 Bcf stronger compared to the previous week."

If forecasters are correct, next week's reported storage figures may flip back into withdrawal. In a Wednesday report Natgasweather.com said more seasonal temperatures are on the way. "The very mild spell across the central, southern and eastern U.S. is in the process of coming to an end as a weather system over the Great Lakes taps into a bit colder Canadian air and spreads it south and east the next few days.

"This will finally drop overnight lows back below freezing for several nights across the northern and central U.S. late this week into the weekend to bring a modest increase in natgas demand. Cooling is also expected to push deep into Texas and the South for a couple days to drop highs out of the 70s to 90s and into the 50s to 70s. The associated cold front will finally push through the Mid-Atlantic and East Coast Friday to bring a return to seasonal temperatures with highs mainly in the 40s and 50s, locally 30s.

"A break between weather systems over the northern and eastern U.S. is expected mid next week before additional weather systems arrive with areas of rain and snow, but continuing to look seasonal in nature as they fail to tap adequately into the frigid cold pool over central Canada."

In overnight Globex trading April crude oil rose 25 cents to $38.71/bbl and April RBOB gasoline shed a penny to $1.4097/gal.

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