September natural gas is expected to open a penny higher Thursday morning at $2.81 as traders mull forecasts of Thursday's government storage report coming in as low as the single digits. Overnight oil markets fell.
Traders saw Tuesday's gains as weather-driven. "The natural gas market extend[ed] the rally of the past two days as the temperature outlook has turned warmer, limiting likely storage injections over the next few weeks," said Tim Evans of Citi Futures Perspective. "Expectations for Thursday's DOE storage report are running near 20 Bcf in net injections, a supportive step down from the 22 Bcf refill in the prior week and well below the 66 Bcf five-year average for the week ended Aug. 19.”
"Natural gas went up on its own strength as most of the other markets were down. That's a good sign," said a New York floor trader. "$2.749 was the low so $2.75 should be a little bit of support, and above that we are looking at $3. I'm hearing a 19 Bcf build for the storage report."
Other estimates include ICAP Energy at 13 Bcf, PIRA Energy at 15 Bcf, and IAF Advisors at a thin 11 Bcf. Last year 63 Bcf was injected.
Industry consultant Bentek Energy estimates an even thinner 9 Bcf utilizing its flow model and said, "Week-over-week, the largest change in storage activity is estimated to have occurred in the South Central region, where a withdrawal of 22 Bcf is forecast compared to the previous week's announced 12 Bcf withdrawal. Sample withdrawal activity in the South Central salt dome facilities increased to levels surpassing the July 29 storage week, when the EIA reported a 16 Bcf withdrawal from the facilities, at -13.2 Bcf, a week over week increase in withdrawal strength of 8.7 Bcf."
At 8 a.m. EDT the National Hurricane Center (NHC) was closely following an area of low pressure just southeast of the Turks and Caicos Islands. The feature lacked a well defined center and could become a tropical depression in the next couple of days, NHC said. It was given a 50% chance of tropical storm development in the succeeding 48 hours.
Now-Hurricane Gaston has strengthened to 75 mph winds and was 1,225 miles east of the Leeward Islands. It was headed northwest at 17 mph, and NHC projected its course to be east of Bermuda.
In overnight Globex trading October crude oil fell 8 cents to $46.69/bbl and October RBOB gasoline shed a penny and a half to $1.4015/gal.