July natural gas is expected to open unchanged Thursday morning at $3.02 as traders discount expected warm temperatures and high power burns. Overnight oil markets were narrowly mixed.
Forecasters continue to see a warmer-than-normal East and Midwehst. Above normal temperatures are expected from New England to Iowa and as far south as Virginia. "A small hotter adjustment is made today in the Midwest, where the period starts out with temperatures in the low-mid 90s for highs in the region," said MDA Weather Services in its morning 6-to 10-day outlook. "The East will likewise be hot, with temperatures averaging the period in the above to near much above normal categories from the Great Lakes to the East.
"Some concern exists following the early period peak in the East, however, with this being a result of a backdoor cold front in the vicinity. There remains disagreement with this feature's timing and impacts among guidance, posing a risk through mid-period. The West Coast trends hotter late."
Not surprisingly analysts are expecting above-average power burns. Industry consultant Genscape has "Lower 48 power burn rising to an average 31.2 Bcf/d, peaking Tuesday at what is expected to be a summer- and year-to-date high of 32.1 Bcf/d. (Coincidentally, that matches the June 2016 daily average).
"The main thrust of increased gas burns will be a product of heat hitting major population markets in Midwest, Northeast, New England and SEMA [Southeast Mid-Atlantic]. Elsewhere, Texas will be mostly around normal. West burns will remain suppressed with significantly cooler-than-normal temps, continued strong renewables output, and the return-to-service of the 1175 MW Columbia Nuke station in Washington."
The 10:30 a.m. EDT release of storage figures by the Energy Information Administration (EIA) has traders looking for builds ahead of last year and five-year averages. Last year 68 Bcf was injected and the five-year average stands at 94 Bcf.
Ritterbusch and Associates is expecting an increase of 90 Bcf while PIRA Energy calculates a 102 Bcf injection. A Reuters survey of 25 traders and analysts revealed an average 98 Bcf with a range of 80 Bcf to 111 Bcf.
In overnight Globex trading July crude oil eased 26 cents to $45.46/bbl and July RBOB gasoline rose fractionally to $1.4956/gallon.