May natural gas is set to open unchanged at $2 Thursday morning as traders expect a government storage report to show a wider degree of variability than normal compared to industry estimates. Overnight oil markets were mixed.
Estimates for the 10:30 a.m. EDT Energy Information Administration (EIA) storage report are coming in widely dispersed. Storage currently stands at 2,493 Bcf. Last year 10 Bcf was withdrawn, and the five-year pace is for a 22 Bcf decline. Ritterbusch and Associates is calculating a 16 Bcf pull, and a Reuters survey of 24 traders and analysts revealed an average 22 Bcf withdrawal with a range of -16 to -33 Bcf. ICAP Energy figures on a 28 Bcf decline.
Last week's 15 Bcf withdrawal caught a number of analysts off guard; this week's storage report may do the same. Fifteen Bcf was about 7 Bcf less than what was expected last week. "This week we see as another tricky week," said John Sodergreen, editor of Energy Metro Desk.
Sodergreen's data is coming in at an upper-20 Bcf withdrawal. "The range of forecasts this week was wide at 20 Bcf; -15 to -35 Bcf," he said. "Though the range between the three categories we track was less than 3 Bcf (signaling a surprise report) it was none the less elevated at 2.55 Bcf. And the spread between Friday's Early View and this week's consensus is 4.4 Bcf, or well over the needed 3.5 Bcf to point to a surprise. We expect this to be the last pull of the season, despite the latest forecasts calling for cooler temps ahead."
Data from Bentek Energy showed the bulk of withdrawal activity concentrated in the East and Midwest. Utilizing its flow model, Bentek came up with a 27 Bcf withdrawal. "A withdrawal stronger than the five-year average and last year's withdrawal would be the first of the year," Bentek said. "A withdrawal of 27 Bcf would take inventories to 2,466 Bcf, 841 Bcf (52%) above the five-year average, 1,000 Bcf (68%) above last year's levels, and 15 Bcf above the five-year maximum level.
"The East and Midwest regions are forecast to have accounted for the entirety of the withdrawal for the week and 85% of absolute net activity."
Temperature patterns in the East and Midwest were the main storage drivers. "Temperatures in the Northeast cell region averaged 45.7 degrees Fahrenheit, 7 degrees colder than the previous week's average. Meanwhile, Midwest net sample withdrawal activity totaled 8.5 Bcf, 5.3 Bcf above the previous week's total, as temperatures in the Midcon Market region fell by an average 8.3 degrees."
In overnight Globex trading May crude oil rose 13 cents to $38.45/bbl and May RBOB gasoline fell a penny to $1.4552/gal.