April natural gas is expected to open unchanged Thursday morning at $2.80 as traders cogitate on near-term cooler weather and look past a government report that is expected to show minimum usage. Overnight oil markets plunged.
Overnight weather models trended slightly cooler. "Two things added together this morning to contribute to a slight heating degree day demand increase this morning," said Matt Rogers, president of Commodity Weather Group, in a Thursday morning report to clients. "The one- to five-day has trended colder for the Midwest, East and South with this cool to cold push into the weekend and lingering longer for the East Coast (slower warming) toward the end of the range. Also, the European has slid back some on the 11- to 15-day with less impressive warming overall, even though it does favor a general warm-dominated pattern look still for the Midwest, East and South."
Tim Evans of Citi Futures Perspective saw Wednesday's modest gain as reflecting a slightly cooler 11- to 15-day outlook. "There may have also been some book-squaring ahead of Thursday's DOE storage report, although consensus expectations for a minimal 2-4 Bcf in net withdrawals are so far below the 132 Bcf five-year average that even a somewhat larger-than-expected draw for last week would still rate as clearly bearish on a seasonally adjusted basis," he said.
Expectations are that the current year-on-five-year storage surplus will take a healthy jump as estimates are coming in at less than a 5 Bcf withdrawal. Last year 67 Bcf was pulled, and ICAP Energy is looking for a 4 Bcf withdrawal. Houston-based IAF Advisors calculates a 2 Bcf injection, and if it happens, it would be the first-ever February build. A Reuters survey of 24 traders and analysts revealed an average 4 Bcf decline with a range of +12 Bcf to -22 Bcf.
The National Weather Service (NWS) continues to forecast well below normal heating load, thus setting up the likelihood for a soft storage withdrawal report for next week. For the week ending March 4, NWS predicts that New England will have 177 heating degree days (HDD), or 56 fewer than normal, and the Mid-Atlantic states of New York, New Jersey and Pennsylvania are expected to have 169 HDDs, or 50 fewer than average. The greater Midwest from Ohio to Wisconsin is expected to see 180 HDDs, or 53 short of its normal seasonal tally.
In overnight Globex trading April crude oil fell 84 cents to $52.99/bbl and April RBOB gasoline fell 4 cents to $1.6376/gal.