February natural gas is expected to open 11 cents higher Thursday morning at $3.33 as forecasters suggest Alaska ridging late in the month consistent with a return of colder temperatures to the Lower 48. Overnight oil markets rose.
The ongoing pattern of volatile weather patterns continues. "Mostly minor short-range changes are noted this morning, but we must continue to watch this last piece of Arctic air from the former pattern scrape the Plains (maybe northern Texas), the Midwest, and then the East Coast this weekend for some briefly colder risks," said Matt Rogers, president of Commodity Weather Group in a Thursday morning report to clients.
"Otherwise, the six-10 day is super warm, with warmer risks as we show widespread strong above-normal anomalies during the period following the three-day holiday weekend...Massive changes are also seen over the Alaska area -- turning it from a trough to a ridge in the 11-15 day to set the stage for a return to a colder pattern in the final days of January."
Last week, 49 Bcf was reported injected by the Energy Information Administration (EIA) and no forecast even came close. This week's withdrawal report is estimated in the 140 Bcf area, and analysts are a little skittish.
"We smell another big surprise this week, though in the other direction," said John Sodergreen, editor of The Desk. "Besides the nutty report last week that we imagine will true-up this week, also consider the timing of last weekend's cold blast crushing all in its path back East. Last week's weather was 7% warmer than last year and 14 % warmer than the five-year average."
Last year 152 Bcf was withdrawn and the five-year pace stands at a 168 Bcf pull. Industry consultant Bentek Energy, utilizing its flow model, predicts a 138 Bcf withdrawal, and PIRA Energy is looking for a 140 Bcf reduction. A Reuters survey of 19 traders and analysts revealed an average 144 Bcf draw with a range of -125 Bcf to -184 Bcf.
Just as this week's report is expected to be shy of long-term averages next week's report is likely to be similar in as much as the National Weather Service (NWS) forecasts below-normal heating load for the week ending Jan. 14. NWS predicts that New England will have 231 heating degree days (HDD), or 42 fewer than normal, and New York, New Jersey and Pennsylvania should experience 216 HDDs, or 45 fewer than normal. The greater Midwest from Ohio to Wisconsin is expected to see 239 HDDs, or 57 fewer than its seasonal tally.
In overnight Globex trading February crude oil gained 90 cents to $53.15/bbl and February RBOB gasoline rose 3 cents to $1.6190/gal.